The heads of both the International Monetary Fund and World Bank have warned that the global economy is in dire straits.
Stock markets from New York to London to Tokyo plunged on the bleak assessment.
Speaking at a news conference in Washington, World Bank President Robert Zoellick said that, unlike in 2008, the signs of trouble are clear.
"The world is in a danger zone," he said. "In 2008, many people said they did not see the turbulence coming. Leaders have no such excuse now."
He said that while a repeat of the 2008 financial crisis is not probable, the European Union's struggles to manage its sovereign debt crises and bleak signs from the U.S. economy were cause for concern.
"I still think that the double-dip recession for the world's major economies is unlikely," he said, "but my confidence in that belief is being eroded daily by the steady drip of difficult economic news."
Zoellick urged Europe, Japan, and the United States to act to address their economic problems before they significantly affect the rest of the world.
IMF Managing Director Christine Lagarde
A few blocks away, International Monetary Fund head Christine Lagarde was saying much the same at a press conference to kick off the annual meetings of the 187-nation body.
Lagarde warned that the global economic situation was entering a "dangerous phase" and said countries' heavy debt burdens could "suffocate" recovery if action isn't taken.
"What needs to happen is medium-term, long-term, solid, well-anchored measures that will actually aim at restoring good public finances by reducing deficits, by stabilizing debt and gradually reducing it," she said. "[That] has to be first and at the forefront of any agenda in those economies."
The grim predictions follow the U.S. Federal Reserve's statement on September 21 that a complete recovery from the recession is years away and that the U.S. economy faced "significant downside risks."
The Federal Reserve's announcement that it would sell short-term bonds and buy longer-term debt in an effort to stimulate the economy did little to calm financial markets.
Earlier this week, the IMF slashed its growth forecasts for this year and next.
In a separate report, the IMF said the global financial system is currently facing its biggest challenges since the 2008 economic crisis.
Financial markets around the world plunged on the bleak assessments.
Great Britain's FTSE 100 Index closed down 246.8 points, its largest drop since November 2008.
In the United States, the Dow Jones industrial average fell more than 400 points, while in Europe, the benchmark Euro Stoxx 50 index was down 4.9 percent.
Asian stocks also tumbled, sending the regional benchmark index toward its lowest close in months.
Louise Cooper, a market strategist at BGC Partners in London, described the worries plaguing investors.
"Well, the Federal Reserve has said quite clearly they are increasingly concerned about the state of the U.S. economy," she said. "We've had big downgrades this week from the IMF in terms of global economic growth. I think there is significant fear about economic growth in the Western world and on top of that we have still got the eurozone banking crisis and sovereign debt crisis. There are plenty of things to be fearful about if you work in the financial market industry and, to be honest, if you work in the bigger wider world as well."
Meanwhile, White House spokesman Jay Carney said President Barack Obama has urged European leaders attending the UN General Assembly this week to take "forceful and decisive" action to confront current eurozone debt problems.
Europe's troubles are largely centered around Greece's financial straits. The Mediterranean nation could default on its debt next month unless it receives a $10.9 billion installment from a bailout fund managed by the European Central Bank, the European Commission, and the IMF.
The United States faces a stagnant job market, a record deficit, and congressional infighting that has hampered long-term efforts to reduce it.
written by Richard Solash, with agency reports