IMF Forecasts U.S. Housing Slump to Accelerate Global Financial Slowdown

World economic growth is expected to slow to 3.7 percent in 2008 due to a fallout in the U.S. subprime housing market, according to a report by the International Monetary Fund (IMF).

Blaming a deteriorating financial market and the continuing correction in the U.S. housing market, the “World Economic Outlook” indicates the United States will lead this slowdown and will slip into a “mild recession” in 2008. While the report expects emerging economies to fare better, it does indicate moderate growth will be tempered by the overall financial slump.

Simon Johnson, Economic Counsellor and Director of IMF’s Research Department explains.