October 18, 2007	Thursday	Shawwal 5, 1428

WASHINGTON, Oct 17: The International Monetary Fund on Wednesday slashed its 2008 global economic forecast, warning that turbulence stemming from a crisis in the US housing sector could crimp growth worldwide.

The world economy is expected to expand 4.8 per cent next year after a 5.2 per cent pace projected for 2007, the IMF said in its twice-yearly World Economic Outlook (WEO) report.

The downgrade comes in the wake of turmoil in global financial markets in August that prompted the IMF to reverse course after an unusual update in July in which it raised its 2008 global growth forecast to 5.2 per cent.

The greatest threat to the world economy is the financial market unrest stemming from the high-risk US sub-prime mortgage sector, where loans were given home buyers with poor credit histories, the IMF said. This has affected banks and lenders worldwide and made credit conditions more difficult.

In the 13-nation eurozone, growth was reduced to 2.1 per cent in 2008, 0.4 percentage point lower than in July, as a result of the delayed effects of euro appreciation, trade spill-overs from the US and more difficult financing conditions.—AFP