The International Monetary Fund (IMF) says there is a danger the fragile global recovery could collapse.
It's especially alarmed at the situation in Europe's Eurozone, where Greece is teetering on the brink of default. That in turn is causing jitters in other weaker economies.
The IMF says Europe must avoid letting any country default on loans and the United States has to get its fiscal house in order. It says growth is slowing, and while it expects the slowdown to be temporary, there's a heightened risk of spillover from problems in the Eurozone and the US.
These problems, the IMF says, could reverberate across the world, making it harder for banks and businesses to borrow, and undercutting investment in the emerging economies.
It says both Japan and the US need to do more to sort out their government finances.
Risk of overheating seen
The IMF's chief economist, Olivier Blanchard, is also worried about inflation spikes in countries such as China and Brazil.
With regard to such emerging nations, he says, some "are clearly facing the risk of overheating, and while they are in most cases tightening policies as they should, many of them will need to do more over the coming year."
Inflation in China has hit its highest level in 34 months despite the government's efforts to rein in rising prices.
New rescue package urgently sought
The leaders of the two largest Eurozone economies, Germany and France, say they want a new rescue package for Greece to be agreed as soon as possible.
Chancellor Angela Merkel and President Nicolas Sarkozy made the joint call following talks in Berlin.
In Greece itself, in a wide-ranging reshuffle of the cabinet, a new finance minister has been appointed in an effort to win more political support at home for the austerity measures demanded by international creditors.
The new minister, Evangelos Venizelos, is a former defence minister and adviser to the prime minister, George Papandreou.
The reshuffle comes after mass protests and a revolt in the governing Socialist party over proposed new spending cuts and tax increases.
Parliament still has to endorse the reshuffle.
