WATFORD (Reuters) - Most of the downside risks to the world economy identified six months ago have now materialized, the head of the International Monetary Fund said on Saturday.

“The forecasts we are going to release in a few days are not really improving and most of the downside risks identified six months ago have materialized,” IMF chief Dominique Strauss-Kahn told a conference hosted by British Prime Minister Gordon Brown.
“So it already means the global forecast for the global economy is around 3.7 percent for next year which is one of the lowest in the last two decades,” he said.
Although he spoke of “next year”, Strauss-Kahn appeared to be referring to 2008 economic growth.
The IMF’s twice-yearly World Economic Outlook is due to be released on April 9.
The IMF said on Thursday it had cut its 2008 outlook for world economic growth for the second time this year, in a move that acknowledged housing and credit problems in the United States were exacting a heavy toll on the global economy.
The IMF said it expects the pace of global growth to slow to 3.7 percent this year, down from its January forecast of 4.1 percent and lower still from the 4.8 percent rate it predicted in October last year.
The slower pace of world economic growth came from “ongoing slowing down in the United States” and was also due to the “somewhat rapid spillover from the U.S. to European countries”, he said.
“The so-called decoupling theory appears to be misleading. In fact, emerging economies including China, India and Brazil suffer from slowdown from the rest of the world, even if they stay at high levels of growth,” he said.
He said it was “not enough to think” that fiscal stimulus would boost growth next year.
Until confidence between financial institutions returned, there would be no solution to current market turmoil, he said.
“The only good news is on the trade side,” he said, referring to prospects of progress in global trade talks.