Washington: The International Monetary Fund is set to cut a half point off its 2008 forecast for global economic growth to 3.7%, IMF managing director Dominique Strauss-Kahn told AFP Thursday.
In an interview, Strauss-Kahn confirmed reports this week that the global growth forecast would be lowered from a prior estimate of 4.1%.
The IMF is to publish its growth forecasts next Wednesday in its biannual World Economic Outlook report.
The global economy is “sharply below” the consensus forecast, he said, noting that what he had observed two months ago “was already below the consensus and now the consensus has caught up” to his previous observation.
Strauss-Kahn, who took office in November, declined to use the word “recession” to describe the US outlook.
“What is certain is that the situation is very serious and that the slowdown in the United States, and subsequently in the rest of the world, is a slowdown that is going to be major,” he said in the interview.
His comments came ahead of next week’s spring meetings of the IMF and the World Bank in Washington.
In January, the IMF projected the US economy would expand by 1.5% in 2008.
According to German media reports on Tuesday, the IMF will cut its forecast for economic growth in the United States this year to 0.5% from 1.5% because of a global financial market crisis and a housing market slump.
Strauss-Kahn, a former French finance minister, said that while the United States and European countries are the principal victims of the credit crunch, emerging countries, which have been a global pole of dynamic growth, would also be affected.
“I am particularly concerned about the central European countries,” he said, without identifying them except to say they are members of the European Union.
In an interview with the French newspaper Le Figaro published Wednesday, Strauss-Kahn said that the IMF was revising downward its January forecast for the US economy and “the estimates that we are going to release in a few days are not very good.”
“For the moment consumption is just holding up,” he told Le Figaro, referring to US consumer spending which drives the bulk of the world’s biggest economy.