World Bank report: Modest global growth in 2008, US runs recession risk

11 January 2008

Washington: Global economy may maintain a modest 3.3 per cent growth pace this year, provided the United States does not slip into recession, the World Bank said earlier this week in a report titled "Global Economic Prospects 2008."

According to the report, global growth has slowed to 3.6 per cent in 2007 from 3.9 per cent in 2006.

The report highlights the fact that the fall in the growth rate has not been very steep, given the magnitude of the global financial turmoil sparked of by the meltdown in the US mortgage market in 2007.

The report also says that most of the slowdown in 2007 was caused by weaker growth in high-income countries.

US economic growth, it says, may have slowed to 2.2 per cent in 2007, from 2.9 per cent. For the US, the bank forecasts an even slower 1.9 per cent expansion in 2008, and only a gradual increase to 2.3 per cent in 2009.

As for the global economy, after posting a modest growth of 3.3 per cent in 2008, output should expand by 3.6 per cent in 2009. This growth would come on the back of a rebound in the US economy, the report said.