Global slowdown is forecast

Global economic growth will slow for a second straight year in 2008 as tighter credit conditions and higher oil prices weaken expansions in the U.S., Japan and Europe, the World Bank said in an annual forecast.

The world economy will grow 3.3% this year, down from an estimated 3.6% pace in 2007 and 3.9% in 2006, the bank said.

The U.S. economy, the world’s largest, will expand 1.9%, compared with 2.2% last year, it said. Japan’s gross domestic product is forecast to increase 1.8% and the euro region’s to rise 2.1%.

“Things have changed dramatically,” Elliot Riordan, a World Bank senior economist, said Monday in London. “All the uncertainties surrounding global growth and financial markets have become intensified.”

China, India and other developing nations will help prevent a deeper slowdown, the Washington-based development bank said. China will expand 10.8% this year, after 11.3% in 2007. Developing countries as a group will grow 7.1%, from 7.4% last year, the World Bank said.

“Several serious downside risks cast a shadow over this soft landing for the global economy,” the report said, citing “danger of a banking crisis and a U.S. recession.”