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Barefootsies · 05-15-2008, 11:57 AM

May 15 (Bloomberg) -- Deterioration of the U.S. housing market during the first quarter prompted the United Nations to drop its forecast for 2008 global economic growth to 1.8 percent from the 3.4 percent expansion that was predicted in January.

``The world economy is teetering on the brink of a severe global economic downturn,'' the UN's Department of Economic and Social Affairs said in an analysis released today in New York. ``If a continuing fall in house and equity prices is blended with a severe credit contraction, the world economy could come to a virtual standstill.''

House prices fell in two-thirds of U.S. cities in the first three months of the year as a rise in foreclosures depressed property values and home sales tumbled 22 percent, the National Association of Realtors said on May 13.

The U.S. housing slump is ``expected to continue to be a major drag for the world economy, extending into 2009,'' the UN said.

Global growth in 2008 might be as high as 2.8 percent or as low as 0.8 percent under different optimistic and pessimistic scenarios, according to the UN report. UN forecasts for 2009 growth range from 1.4 percent to 2.9 percent, with 2.1 percent expansion considered most likely.

The world economy grew by 3.8 percent last year, UN economists said.

``It is not clear whether the monetary and fiscal policy stimuli implemented in the United States will take effect any time soon or whether more protracted problems in financial and housing markets will push the major economy into a deeper recession with worldwide consequences,'' the UN report said.

Federal Reserve

The U.S. Federal Reserve has lowered the main interest rate by 3.25 percentage points since September to ease financial- market strains and stave off a recession. The $168 billion economic stimulus legislation enacted in February centers on rebate checks for about 130 million U.S. households and tax breaks for businesses.

The UN also revised its January forecast for U.S. economic growth in 2008 to minus 0.2 percent from 2.0 percent. The U.S. economy is likely to grow by 0.2 percent in 2009, the UN said. Forecasts were similarly lowered for the European Union, Africa and other regions.

``Additionally, the unfolding food crisis, which is not only a grave humanitarian issue but also a serious threat to social and political stability in some developing economies, endangers the achievement of the Millennium Development Goals by reversing some of the progress towards those goals made so far,'' the UN said.

The UN goals include halving world poverty and hunger by 2015.

UN chief economist Robert Vos said soaring food prices weren't seen as a ``main driver'' in the lowered projections. World food prices were up 53 percent in April from a year earlier.

Vos said the UN expects oil prices to decline to about $95 a barrel by the end of the year, from today's $123, and drop further to about $90 next year. Food prices will increase ``a bit further'' this year this year and then ``flatten out and decline slightly'' in 2009, he said.

05-15-2008, 11:57 AM
Barefootsies Choice is an Illusion Industry Role: Join Date: Feb 2005 Location: Land of Obama Posts: 42,635	World Economic Growth Forecast Lowered to 1.8% by UN May 15 (Bloomberg) -- Deterioration of the U.S. housing market during the first quarter prompted the United Nations to drop its forecast for 2008 global economic growth to 1.8 percent from the 3.4 percent expansion that was predicted in January. ``The world economy is teetering on the brink of a severe global economic downturn,'' the UN's Department of Economic and Social Affairs said in an analysis released today in New York. ``If a continuing fall in house and equity prices is blended with a severe credit contraction, the world economy could come to a virtual standstill.'' House prices fell in two-thirds of U.S. cities in the first three months of the year as a rise in foreclosures depressed property values and home sales tumbled 22 percent, the National Association of Realtors said on May 13. The U.S. housing slump is ``expected to continue to be a major drag for the world economy, extending into 2009,'' the UN said. Global growth in 2008 might be as high as 2.8 percent or as low as 0.8 percent under different optimistic and pessimistic scenarios, according to the UN report. UN forecasts for 2009 growth range from 1.4 percent to 2.9 percent, with 2.1 percent expansion considered most likely. The world economy grew by 3.8 percent last year, UN economists said. ``It is not clear whether the monetary and fiscal policy stimuli implemented in the United States will take effect any time soon or whether more protracted problems in financial and housing markets will push the major economy into a deeper recession with worldwide consequences,'' the UN report said. Federal Reserve The U.S. Federal Reserve has lowered the main interest rate by 3.25 percentage points since September to ease financial- market strains and stave off a recession. The $168 billion economic stimulus legislation enacted in February centers on rebate checks for about 130 million U.S. households and tax breaks for businesses. The UN also revised its January forecast for U.S. economic growth in 2008 to minus 0.2 percent from 2.0 percent. The U.S. economy is likely to grow by 0.2 percent in 2009, the UN said. Forecasts were similarly lowered for the European Union, Africa and other regions. ``Additionally, the unfolding food crisis, which is not only a grave humanitarian issue but also a serious threat to social and political stability in some developing economies, endangers the achievement of the Millennium Development Goals by reversing some of the progress towards those goals made so far,'' the UN said. The UN goals include halving world poverty and hunger by 2015. UN chief economist Robert Vos said soaring food prices weren't seen as a ``main driver'' in the lowered projections. World food prices were up 53 percent in April from a year earlier. Vos said the UN expects oil prices to decline to about $95 a barrel by the end of the year, from today's $123, and drop further to about $90 next year. Food prices will increase ``a bit further'' this year this year and then ``flatten out and decline slightly'' in 2009, he said. __________________ Should You Email Your Members? Link1 \| Link2 \| Link3 Enough Said. "Would you rather live like a king for a year or like a prince forever?"