The International Monetary Fund (IMF) has cut its prediction for 2008 global economic growth, citing the turbulence sparked by the US housing slump.
The IMF would like to see stability return to the markets
In its latest World Economic Outlook report, the IMF now expects the global economy to grow 4.8% next year, down from its earlier 5.2% forecast.
The downgrade follows in the wake of the much-publicised turmoil in the global credit markets.
This was started by record defaults in the US sub-prime mortgage sector.
The IMF, which expects worldwide 2007 growth to hit 5.2%, says the greatest threat to the global economy remains the downturn in the global financial markets.
"Risks... centred around the concern that financial market strains could continue and trigger a more pronounced global slowdown," said the IMF.
"Thus, the immediate task for policymakers is to restore more normal financial market conditions and safeguard the continued expansion of activity."
The IMF expects the US to see a particularly sharp slowdown in economic growth next year.
It now predicts the American economy will expand just 1.9% in 2008, compared with its previous forecast of 2.8%.
Regarding the Chinese economy, the IMF sees its growth slowing slightly to 10% next year, down from 11.5% for 2007.
In Europe, it is projecting that the UK economy will slow to 2.3% in 2008 from 3.1% this year, while Germany's growth will slip to 2% next year from 2.4% for 2007.