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IfW Press Release September 20, 2007
World Economy to Lose Momentum
The world economy has continued to expand rapidly in the first half of the current year. The outlook is, however, currently clouded by the turbulences on the international financial market and .the risks for the outlook have increased considerably over recent weeks. The assessment of the current situation is complicated by the fact that new financial instruments have gained more and more importance in recent years with no experience how these instruments will affect the behavior of the financial system in times of distress. There are, however, good reasons to expect that the problems in the financial sector will not hugely impact on the real economy. In addition, further rapid expansion of economic activity outside the industrialized countries can be expected also because many emerging market economies have improved their external and fiscal positions. Therefore, we have only slightly reduced our forecast for the growth of the world economy in 2008 from 4.7 to 4.4 percent
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