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U.N. Says U.S. Economy Will Falter

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By FRANK JORDANS, The Associated Press

Published: September 6, 2007

GENEVA - The U.S. economy will slow sharply this year and fall behind growth rates in most of the world, according to forecasts in a U.N. report released Wednesday.

Trouble in the housing market will drag U.S. gross domestic product for 2007 to modest 2 percent growth, compared with 3.3 percent last year, the U.N. Conference on Trade and Development said in its flagship annual report.

For the first time since 2001, both the European Union, at 2.8 percent, and Japan, at 2.3 percent, are predicted to have higher GDP growth than the United States.

China, at 10.5 percent, and India, 8.5 percent, should experience economic growth rates similar to the past three years, according to the report.
Global growth is pegged at 3.4 percent, down from 4 percent in 2006, largely, the report says, because of the U.S. slowdown.

For now, the world economy is going through a 'golden period,' said Supachai Panitchpakdi, the former World Trade Organization chief now leading the U.N. agency.

High commodity prices continue to boost growth in developing countries, which accounted for a 37 percent share of global trade last year, the report says. A decade ago, their share was 29 percent.

Economies in Africa are predicted to grow 6 percent, Latin America and the Caribbean by 4.7 percent, and ex-Soviet bloc states still outside the European Union by 7 percent.

'There might be some downward revision,' Supachai said.

'All this depends on the degree of adjustments coming out of the U.S. economy,' he said. Further economic turmoil from risky lending practices - like subprime mortgages for borrowers with weak credit histories - is possible, Supachai said.

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