World Economic Situation and Prospects as of mid-2008
In the wake of turbulence in the economic environment, the United Nations baseline forecast for world economic growth has been revised downward in line with the pessimistic scenario of World Economic Situation and Prospects 2008 published in January. The deepening credit crisis in major developed market economies, as triggered by the continuing housing slump, the declining value of the United States dollar vis-à-vis other major currencies, persisting global imbalances, and soaring oil and non-oil commodity prices are slowing growth of the global economy.
Global growth reached 3.8 per cent in 2007 but is expected to decline markedly to 1.8 per cent in 2008, with the weakness likely extending into 2009. Growth in developing countries is expected to weaken from 7.3 per cent in 2007 to 5.0 per cent in 2008 and to 4.8 per cent in 2009. The downside risks remain high, however, even under this gloomy scenario. In a not-yet-likely, but not improbable pessimistic scenario of a much more protracted downturn in the United States of America and continued international financial turmoil, the world economy could well come to a virtual standstill, with severe adverse effects on developing-country prospects of reaching the Millennium Development Goals.