The Associated Press

Fri, May 16, 2008 (12:22 a.m.)

The U.N. says the world economy is "teetering on the brink" of a severe downturn and will grow by only 1.8 percent in 2008.

That's down from a global growth rate of 3.8 percent in 2007.

The U.N.'s mid-year economic projections released Thursday blamed the downturn on further deterioration in the U.S. housing and financial sectors in the first quarter.

The U.N. said the U.S. problems are expected to continue to be "a major drag for the world economy" into 2009. It forecast global economic growth of 2.1 percent next year.

But developing countries won't suffer as badly. The U.N. said they should reach 5 percent growth this year, compared to a robust 7.3 percent in 2007.