http://www.bloomberg.com/apps/news?pid=20601087&sid=aWNW6ABxw9.Y&refer=home
International Monetary Fund cut its forecast for global growth this
year and said there's a 25 percent chance of a world recession, citing
the worst financial crisis in the U.S. since the Great Depression.
The world economy will expand 3.7 percent in 2008, the slowest pace
since 2002, according to a do***ent obtained by Bloomberg News at a
meeting of Southeast Asian deputy finance ministers and central
bankers in Da Nang, Vietnam. In January the fund projected growth of
4.1 percent.
.......
The IMF gave a 25 percent chance that global growth will drop to 3
percent or less in 2008 and 2009, a pace the fund described as
equivalent to a world recession. The last time that happened was in
2001.
U.S. European Growth
The fund lowered its forecast for U.S. economic growth to 0.5 percent
this year, according to the do***ent, below a 1.5 percent prediction
made in January. The world's biggest economy will expand 0.6 percent
in 2009, it said.
The euro region will expand 1.3 percent in 2008, the do***ent said,
down from the fund's 1.6 percent projection in January.
.......
``The greatest risk comes from the still-unfolding events in financial
markets, particularly the potential that deep losses on structured
credits related to the U.S. subprime mortgage market and other sectors
would seriously impair financial-system capital and initiate a global
de-leveraging that would turn the current credit squeeze into a full-
blown credit crunch,'' the IMF statement said.
Japan's economy, the world's second largest, will grow 1.4 percent in
2008, less than the 1.5 percent the IMF predicted in January,
according to the statement. China will grow 9.3 percent this year,
slower than the 10 percent projection made in January, the statement
said.
The Asian Development Bank today lowered its forecasts for Asia, and
said central banks in the region will pursue policies to quell
inflation rather than spur economic growth. The World Bank earlier
this week also warned of the threat of rising energy and food prices.
Growth in Asia excluding Japan will be 7.6 percent this year, the IMF
said.
Divergence
``The divergence between advanced and emerging economies is expected
to continue, with growth in advanced economies generally expected to
fall well below potential,'' the IMF do***ent said.
......
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