UN: World economy 'teetering on brink of downturn'

The United Nations said today the world economy was “teetering on the brink” of a severe downturn and would grow by only 1.8% this year.

That is down from a global growth rate of 3.8% in 2007.

The UN’s mid-year economic projections blamed the downturn on further deterioration in the US housing and financial sectors in the first quarter.

The world body said the US problems were expected to be “a major drag for the world economy” into 2009. It forecast global economic growth of 2.1% next year.

Developing countries would not suffer as badly, it said. The forecast said they should reach 5% growth this year, compared with a robust 7.3% in 2007.

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