updated 1/29/2008 11:43:18 AM ET 2008-01-29T16:43:18

The world economy will slow significantly in 2008 but the United States will avoid recession, the International Monetary Fund forecast Tuesday.

Major Market Indices

The stimulus package being hashed out between Congress and the White House, along with the Federal Reserve’s recent cut of a key interest rate, should provide a modest boost to U.S. economic growth by the middle of the year, IMF officials said.

“This is actually a good combination of policies for the U.S.,” Simon Johnson, economic counselor and director of the research department at the IMF, said during a press briefing.

Slower U.S. growth and credit market turmoil stemming from U.S. housing market woes also will hinder the global economy, the IMF said.

“The five-year long global expansion has begun to moderate in response to the spreading effects of financial disruptions,” Johnson said.

Rising home foreclosures and falling home prices caused U.S. financial markets to drop steeply in recent months, as major banks such as Citigroup Inc. and Merrill Lynch & Co. Inc. have written down billions of dollars of securities that include bad home loans.

U.S. economic growth will slow to 1.5 percent in 2008, Johnson said, down from an estimated growth rate of 2.2 percent in 2007. The 2008 projection is lower than the IMF’s October 2007 prediction of 1.9 percent.

The IMF now sees world economic growth slowing to 4.1 percent this year, down from 4.9 percent in 2007.

The reduction is the second cut in a row in the IMF’s estimate of global economic growth for this year. Last July, the IMF estimated the world economy would grow 5.2 percent in 2008, and in October the estimate was reduced to 4.4 percent.

The estimates were included in an update of the IMF’s World Economic Outlook, which is issued twice a year. The next update will be issued in April.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 1.97%
$30K home equity loan FICO 5.80%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.70%
13.70%
Cash Back Cards 17.66%
17.91%
Rewards Cards 17.05%
17.17%
Source: Bankrate.com