US GDP Growth to Fall as Low as Minus 1.3 Pct.: Fed

U.S. economic growth this year could fall as low as minus 1.3 percent, while unemployment might soar as high as 8.8 percent.

The Federal Reserve Board said yesterday that GDP growth will hover between minus 0.5 and minus 1.3 percent, a big drop from its October forecast of minus 0.2 to plus 1.1 percent. Its forecast for the jobless rate also rose more than one percent from between 7.1 and 7.6 percent to between 8.5 and 8.8 percent.

The U.S. economy is worsening much faster than expected, according to the Fed`s latest economic outlook.

The Associated Press said unemployment – now at 7.6 percent – could rise to nine percent early this year even if Washington`s stimulus plan is implemented.

Projections for world economic growth have also been downgraded due to the deepening global economic slowdown.

Dominique Strauss-Kahn, head of the International Monetary Fund, predicted global economic growth will see zero growth this year, according to AFP.

He said the IMF`s next forecast to come in three months could well be close to zero in an interview with the French business daily Les Echos. “2009 is already largely determined and it will be a very bad year,” he said.

esprit@donga.com