US growth is projected by the International Monetary Fund to slow to 1.5% this year, down from 2.2% last year and 1.9% estimated by the institution in October 2007. “Economic growth in the United States appears to have slowed notably in the Q4 of 2007, with recent indicators showing weakening of manufacturing and housing sector activity, employment, and consumption,” said the IMF in an update of its World Economic Outlook. Buffeted by recent financial market turbulence and a weakening US performance, the IMF said, world economic growth is projected to slow to 4.1% this year, down from 4.9% in 2007 and 4.8% it estimated last October. “Financial market strains originating in the US subprime 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. It said that there was a risk that the ongoing turmoil in financial markets would further reduce domestic demand in the advanced economies with more significant spillovers into emerging market and developing countries.
“Growth in emerging market countries that are heavily dependent on capital inflows could be particularly affected, while the strong momentum of domestic demand in some emerging market countries provides upside potential,” it said. Growth in emerging market and developing countries is also expected to ease, moderating from 7.8% in 2007 to 6.9% in 2008. In China, growth is projected to decelerate from 11.4% to 10%, which should help alleviate overheating concerns, the IMF said.
The IMF issues World Economic Outlook twice a year. (people.com.cn)
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