IMF says US crisis is risk for world growth

IMF says US crisis is risk for world growth
# 30 January 2008 07:50 (UTC +04:00)
The global economy is poised to grow by 4.1% this year, down a third of a percentage point from a previous estimate, the IMF said.
The US economy, the world’s largest, will expand by 1.5%, 0.4 points lower, the IMF said in an update of its twice-yearly World Economic Outlook.
For the euro area, growth is projected to be 1.6% in 2008, down from 2.6% last year.
‘The overall balance of risks to the global growth outlook is still tilted to the downside,’ the Fund said.
‘The financial market strains originating in the US sub-prime sector - and associated losses on bank balance sheets - have intensified, while the recent steep sell-off in global equity markets was symptomatic of rising uncertainty,’ the IMF said.
The main risk is that the ongoing financial markets turmoil would further reduce domestic demand in the advanced economies and create more significant spillovers into emerging market and developing economies.
The US, where the crisis in subprime, or risky, mortgages spilled over into the financial markets in August, is the ‘epicentre’ of the global slowdown, the IMF said. /APA/
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