World economy to slow significantly

Washington: A "significant" slowing in the pace of 2008 global econ-omic growth appears inevitable, the International Monetary Fund (IMF) said, also warning that restoring world financial markets was going to be a complex and protracted task.

IMF spokesman, Masood Ahmad, said the US Federal Reserve's 75 basis point cut in the federal funds interest rate on Tuesday - the largest cut in the benchmark rate in more than 23 years - was "appropriate and helpful".

The Fed's move followed deep losses on world stock markets as investors worried about a possible US recession and whether the slowing US economy would drag the rest of the world with it.

"The volatile weakening experienced in many equity markets during the past few days has underscored the burden that the current financial market turmoil represents for the global growth outlook," Ahmad said in a statement.

"Thus, a significant 2008 slowing in the global expansion already appears inevitable, and downside risks still predominate," he added.

Ahmad said the US government should apply "targeted and timely" fiscal measures to boost demand.

"Financial market prices are consistent at present with expectations of significant future rate declines," he said.

"In any case, there is no doubt that the Federal Reserve will respond with alacrity to new fundamental and financial developments," he said. "In addition, targeted and timely fiscal measures could provide near-term support for demand."

The statement came ahead of a more thorough update scheduled for tomorrow at 1600 GMT, or 11 am Washington time, on the health of the global economy and financial markets.

GDP: UK holding ground

Britain's economy grew slightly faster than expected in the final quarter of last year to record the strongest full-year performance since 2004, a sign that it is holding some ground in the wake of the credit crunch.

The Office for National Statistics said in preliminary data yesterday that the economy grew 0.6 per cent in the final quarter of 2007, easing from 0.7 per cent in Q3 but just above forecasts for a reading of 0.5 per cent.

It was still the lowest quarterly growth rate since the third quarter of 2006 and took the annual rate down to 2.9 per cent in the fourth quarter from 3.3 per cent in the three months to September.

The annual growth rate was the lowest since the second quarter of 2006 but also just above economists' consensus expectations.

- Reuters