Goldman cuts GDP forecasts for US, Japan and Europe

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PARIS, Sept 28 (Reuters) Investment bank Goldman Sachs has slashed its forecasts for economic growth in the United States, Japan and Europe, joining numerous forecasters who are abruptly changing view since the start of a global credit crunch.

In a note released this week, Goldman Sachs has cut its U.S.

growth forecast for next year to 1.8 percent from 2.6 and for this year to 2.0 from 2.1.

For Japan, it is calling 2008 growth of 2.1 percent versus a previous call of 2.5, and it says it now expects 2.0 percent GDP growth this year rather than 2.5 percent.

It now expects euro zone growth of 2.0 percent next year, not 2.4 percent, and is forecasting 2.6 percent for this year instead of 2.9 percent.

''Much has changed since mid-July, when we wrote that 'the global economy continues to enjoy one of the strongest sustained expansions in modern history','' chief economist Jim O'Neill said in a preamble to a note on the revisions.

''The mood in financial markets is clearly darker, and the economic data in the developed world are showing signs of wear.

The key question, which will take time to answer, is the extent to which the credit crunch will affect the real economy.'' The bank is less gloomy about emerging market economies.

It maintained its 7.7 percent forecast for aggregate growth in the emerging market world next year and raised it for this year to 8.4 from 8.2 percent.

For advanced economies as a whole its forecast for 2008 is cut to 2.2 from 2.8 percent and for this year to 2.6 from 2.7.

For the world as a whole, it is predicting 4.2 percent now instead of 4.6 percent previously and for this year it is sticking to a rise of 4.7 percent in gross domestic product.


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