IMF lowers global growth forecast, citing financial crisis

WASHINGTON, Jan 29, 2008 (AFP) – The International Monetary Fund on Tuesday lowered its 2008 global growth outlook, citing a US slowdown and financial market turmoil that have put emerging economies at risk. The global economy is poised to grow 4.1 percent this year, down 0.3 percentage points from a previous estimate, the IMF report said.

The US economy, the world’s largest, will expand by 1.5 percent, 0.4 points lower, the IMF said in an update of its twice-yearly World Economic Outlook.

“The 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.

“The overall balance of risks to the global growth outlook is still tilted to the downside.”

The main risk is that the ongoing financial market turmoil would further reduce activity in the advanced economies and “create more significant spillovers into emerging market and developing economies.”

The United States, where the crisis in subprime, or risky, mortgages rippled into the financial markets in August, is the “epicenter” of the global slowdown, the F