UN highlights downturn risk

THE world economy is “teetering on the brink” of a severe downturn and will only grow by 1.8 per cent this year, according to the United Nations.

The forecast growth is significantly down on the 3.8 per cent rate recorded in 2007.

The downturn in American housing and financial sectors in the first three months of the year was blamed by the UN in its mid-year economic projections.

It was forecast that Western Europe’s growth rate will drop from last year’s figure of 2.6 per cent to 1.1 per cent.

Despite the predicted slowdown, the UN said global inflation was expected to rise this year to 3.7 per cent.

The growth of world trade also slowed, from 7.2 per cent in 2007 to 4.7 per cent early this year.