The 4.9 percent growth, around a 0.5 percentage point lower than in 2006, is in line with the rate forecast at the time of the September 2006 World Economic Outlook.

Among the major advanced economies, the slowdown in year-over-year growth in 2007 would be most pronounced in the United States, as the IMF report lowered the growth forecast for the US economy this year to 2.2 percent, 0.7 percentage points lower than the forecast 6 months ago.

"The downward revision for growth in 2007 largely reflects the weaker outlook for residential investment," it said.

With the stock of new homes for sale rising to its highest level in over 15 years, home construction is falling more sharply than previously expected as home builders move to reduce their existing inventory.

But the report still noted that the US economy is not heading for recession and the growth forecast for the next year will rise to 2.8 percent.

Growth is also projected to ease to 2.3 percent for this year and the next in the euro zone, "reflecting both the effect of some monetary and fiscal tightening, and a lower external contribution to growth."

"So far, activity in early 2007 is being well sustained, although, as expected, consumption in Germany has cooled in the wake of the value-added tax (VAT) increase," the report said.

Germany, the biggest economy in the euro area, will expand 1.8 percent this year and 1.9 percent the next year, while France will grow by 2.0 percent in 2007 and 2.4 percent in 2008, a little higher than its 2.0 percent growth rate last year.

The UK economy is expected to continue its robust growth of 2.9 percent in 2007 and 2.7 percent in 2008.

The expansion in Japan would continue at about the same pace with the euro area.

But emerging markets and developing countries would continue to grow strongly, drawing continued support from benign global financial conditions.

1

2