2008-4-16 11:07
trustzoon
IMF slashes world growth forecast
IMF slashes world growth forecast
Analysts forecast the US will briefly go into recession
The International Monetary Fund (IMF) has said that the world economy will grow much more slowly in the next two years as a result of the credit crunch.
In its latest economic forecast, the IMF says that world economic growth will slow to 3.7% in 2008 and 2009, 1.25% lower than growth in 2007.
The downturn will be led by the US, which the IMF believes will go into a "mild recession" this year.
Growth in the UK will slow sharply to 1.6% in both 2008 and 2009.
It said that the UK economy would be affected by a weakening housing market, the contraction of the financial sector, and the impact on UK exports of weaker growth in the US and Europe.
Its UK forecast is substantially below the Treasury forecast of around 2% growth this year and 2.5% next year made at the time of the March Budget.
Worldwide impact
The IMF says that the big emerging market countries like China and India which are growing rapidly will be less affected by the slowdown, although they will be affected by a slowdown in trade among the rich countries.
The rate of growth of imports into rich countries is expected to slow sharply, leading to a cut in the rate of growth of exports by developing countries.
And it warns that the spillover will more severe in Latin America or in countries linked to the dollar, which has declined sharply on world currency markets.