UN Forecasts Slower Global Growth in 2008

World economic growth will drop steeply to 1.8 percent this year, from 3.8 percent in 2007, the United Nations said Thursday in a mid-year economic report.

In its World and economic situation and prospect 2008 issued in January, the world body had predicted that global growth would stand at 3.4 percent in this year.

The report said that further deterioration in the housing and financial sectors of the United States in the first quarter of 2008, which is expected to be a further drag for the world economy, extending into 2009, have contributed to the revision.

Growth in developing countries is expected to reach 5 percent, as compared to a robust 7.3 percent in 2007, and is projected to decline further to 4.8 percent in 2009, the report said.

If monetary and fiscal stimuli recently instituted in the United States take hold, the world is likely to experience only a moderate slowdown, to 2008 growth of 2.8 percent, it projects.

But if they are insufficient to regain economic momentum in the United States, and if a continuing fall in house and equity prices is blended with a severe credit contraction, the world economy could come to a virtual standstill.

According to this pessimistic scenario, world growth would slow to less than one percent this year and 1.4 percent the next, the report added.

 

Source: CRIEnglish