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World economy to grow by only 1.8%

The United Nations says the world economy is teetering on the brink of a severe downturn and will grow by only 1.8 per cent in 2008. That is down from a global growth rate of 3.8 per cent in 2007.

The UN’s mid-year economic projections released Thursday blamed the downturn on further deterioration in the U.S. housing and financial sectors in the first quarter. The UN said the US problems are expected to continue to be a major drag for the world economy into 2009. It forecast global economic growth of 2.1 per cent next year.

But developing countries will not suffer as badly. The UN said they should reach 5 percent growth this year, compared to a robust 7.3 per cent in 2007.

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