IMF Managing Director Rodrigo de Rato

Global economic growth is expected to fall to 4.9% in 2007 and 2008 from 5.3% in 2006, with US growth slowing to 2.6% this year but recovering in 2008, according to draft IMF forecasts.

The forecasts have been obtained by news agency Reuters before the planned bi-annual publication of the International Monetary Fund's World Economic Outlook (WEO) in mid-April. The data suggests that the performance of recent years, the best in three decades, generally looks set to continue despite the fall in US economic growth.

Last January, IMF Managing Director  Rodrigo de Rato said that global growth will approach 5% this year: "After four consecutive years of strong growth, what we expect is that global growth will remain solid in 2007, approaching 5%. This represents certainly a very significant expansion of the global economy and probably the longest — if not the longest, one of the longest — sustained periods of growth in the post-Bretton Woods era, that is, after the Second World War. In that respect, while the U.S. economy has slowed down in large part because of the continued weaker housing market, what I can say now is that a soft landing seems more sure as lower energy prices have supported employment growth and consumption. Also, we see the decrease in the housing market to be bottoming out.

At the same time, and this is an important issue that makes comparison with 2000 different, spillovers to other economies from a slower U.S. growth have been minimal. Economic recovery in Europe has broadened at the same time as we were seeing the U.S. slow down, and growth in Japan is broadly on track after an earlier soft patch."

In its draft report, the IMF says that the US economy is expected to grow at a 2.6% pace in 2007 and 3.0% in 2008, both 0.3 percentage points lower than the IMF forecast in September 2006 and the rate of 3.3% expansion in GDP - gross domestic product - in 2006.

In an interim assessment issued this week, the Organisation for Economic Co-operation and Development (OECD), said that a US slowdown would be offset by robust growth in Europe and Asia in 2007.

The IMF forecasts that growth in the Eurozone will be 2.3% this year and next year after 2.7% in 2006, which was the best performance in six years.

Japan's economy is expected to expand by 2.2% in 2007 and 1.9% in 2008, after 2.2% in 2006.

The IMF is forecasting that Germany will grow by 1.8% in both 2007 and 2008 after 2.7% in 2006.

The growth forecast for France is 1.9% this year and 2.3% in 2008.

Italy, the third biggest economy in the Eurozone after Germany and France respectively, is forecast to grow by 1.8% this year and 1.7% in 2007, after 1.9% in 2006.

The UK is forecast to achieve growth of 2.9% this year - the fastest for any G7 country - and 2.7% in 2008, unchanged from 2006.

The IMF says Canada's GDP will rise by 2.5% in 2007 and 3.0% next year, after 2.8% in 2006 Spain is expected to grow by 3.4% 2007 and 3.3% in 2008, after 3.8% in 2006.

In Asia, Chinese GDP is expected to expand 10% in 2007 and 9.5% in 2008, in line with government plans to slow the pace after growth of 10.7% growth in 2006. India will achieve growth of 8.3% this year and 7.8% next year after 9.3% in 2006.

Expansion in world trade is expected to slow to 6.9% in 2007 from 9.1% in 2006 and rise to 7.4% in 2008, according to the draft forecasts.

The IMF's global GDP growth figure for last year, 5.3%, matches that of 2004 as the best since the early 1970s.