The International Monetary Fund has once again downgraded its forecasts for global economic growth.

In its updated World Economic Outlook released this afternoon (2:00pm AEDT) in Beijing, the global economy is tipped to grow by 3.5 per cent in 2015.

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While the 3.5 per cent forecast is higher than growth in 2014, it is 0.3 percentage points lower than the most recent forecast released last October.

The IMF’s outlook for 2016 is for 3.7 per cent growth but once again a 0.3 percentage point downward revision from the last update.

The deepening economic crisis in Europe is continuing to take a toll with growth downgrades in 2015 and 2016 for the traditional powerhouse of Germany, along with France and Italy.

Other major economies, such as Canada and Britain, will also contract although less than the euro area.

The IMF’s revised forecasts follow last week’s even more pessimistic downgrade from the World Bank which tips an expansion of just 3 per cent in 2015, down from a projection of 3.4 per cent in June.

A significant easing is expected in China, according to the IMF, as the world’s second biggest economy continues what authorities say is a “managed slowdown”.

The latest official economic growth figures from China, released an hour before the IMF’s report, show its economy grew 7.4 per cent in 2014, which is its slowest calendar year growth since 1990.

The IMF sees China’s growth in 2015 at 6.8 per cent and 6.2 per cent in 2016 – down 0.3 per cent and 0.5 per cent respectively.

While slowing growth in normally pessimistic news, the IMF appears relieved that the managed slowdown in China seems to be on track.

“The gradual decrease in growth to below 7 per cent in 2015 reflects a welcome decision to reorient the economy towards consumption and away from the real estate sector and shadow banking,” Mr Blanchard said.

However, he said the risk was that slower growth in China would have fallout in the rest of Asia.

Earlier today, ANZ’s chief economist in Asia Li Gang Liu told the ABC’s AM program that China’s financial system and decelerating housing prices continued to unsettle most observers.

“The key risk facing the Chinese economy is to avoid major financial distress in China’s shadow banking sector and also in the second and third tier commercial banking system,” Mr Liu said.

“We think that China’s property market can no longer experience fast appreciation any more. Because of the oversupply price will probably continue to be depressed.

“So I think the property bubble issue is how to prevent China’s property market from falling at a very sharp pace.”

With strengthening evidence that the economic recovery is taking hold, the outlook in the United States has been upgraded by 0.5 per cent to 3.6 per cent in 2015 and by 0.3 per cent to 3.3 per cent in 2016.

Speaking in Beijing, the IMF’s economic counsellor Olivier Blanchard said the world economy was “facing strong and complex cross currents” even though major economies are benefiting from the falling oil price.

“The cross currents make for a complicated picture. Good news for oil importers, bad news for exporters. Good news for commodity importers, bad news for exporters,” Mr Blanchard said.

“In short, many different combinations, many different boxes and countries in each box.”

Australia appears to fit in many of the boxes that contain bad news, although this update did not have country specific forecasts for smaller nations.

West Texas Intermediate crude oil was most recently trading at $US48.44 a barrel, having more than halved over the past six months, and iron ore was slightly lower at $US68.09 a tonne.

Mr Blanchard said countries with substantial buffers or flexible exchange rates have a greater ability to adjust to lower prices.

“Others may need to do more dramatic adjustments. The adverse effects on Russia and Nigeria are likely to be very large,” Mr Blanchard said.

He said that, while some energy firms face financial risks, system risks in the form of country or corporate defaults, appeared to be limited.

The IMF’s outlook comes as financial markets prepare for the European Central Bank to unleash massive economic stimulus later this week with bond buying, or money printing, in the range of 500 billion to one trillion euros.

Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog.