IMF sees growth down

FRANKFURT – The International Monetary Fund will cut its estimates for economic growth in 2008 in the United States and Europe again because of the credit crisis, its chief economist told Boersen-Zeitung newspaper on Saturday. «We will not be able to stick to the estimate of growth of 1.9 percent for the United States nor to the (estimate) of 2.1 percent for Europe,» Chief Economist Simon Johnson said, according to the German newspaper. News detrimental to economic growth has prevailed since October, when the IMF last cut its estimates for economic growth, Johnson said. The IMF will give its new estimates in January, he said. To what extent the subprime crisis, related to risky US housing loans, will spill over to the European economy still remained to be seen, but the strong euro was an additional burden for the continent’s economy, the paper reported Johnson as saying. A further decline in the exchange rate of the US dollar would be necessary, as it remains overvalued, while it would also help to rectify global imbalances, Johnson said, according to Boersen-Zeitung. The IMF considers the Chinese yuan overvalued and an oil price of $60 to $70 would be desirable, he said. The IMF’s Managing Director Dominique Strauss-Kahn said on Friday global financial stability had taken a blow from the subprime crisis and European and US growth would be weaker as a result.