World economy 'facing slowdown'

The outlook for the US economy is set to worsen

Global economic growth is likely to be dampened by the turbulence which has swept world markets, the International Monetary Fund (IMF) has said.

The IMF said it would be revising down its growth projections - with this year being more affected than 2008.

The US would see the largest impact, with some parts of Europe also set to endure lower growth, it added.

Its comments came a day after the OECD warned the US economy would slow sharply in the second half of 2007.

The Organisation for Economic Co-operation and Development's World Economic Outlook report is due for release in October.

Potential vulnerability

Uncertainty over the size of losses in the sub-prime lending market has caused stock market turmoil.

An IMF spokesman said that the unrest came "after an exceptionally long period of benign conditions in international economic markets" and solid global growth, which had provided "a cushion against which we are working".

Most emerging economies remained "relatively robust", the IMF added.

However, it said that some countries which had a high dependency on external financing could be vulnerable to fallout on the financial markets.