United Nations: The United Nations has predicted a deceleration of the world economy this year after three straight years of growth with American economy weakening dragged down by softening housing market.

But the growth will remain robust with slight moderation in developing states and economies in transition, a new report said, noting that among developing nations, sustained high growth in India and China has engendered more endogenous growth through increasing south-south trade and financial linkages.

Stating that the American economy will be a major drag for the global slowdown, the report, released yesterday, maintained that no other developed economy is expected to emerge as an alternative engine for the world economy with growth rate in Europe forecast to slow down to 2 per cent and in Japan below 2 per cent.

The growth of world gross product (WFP) is forecast to moderate its pace to 3.2 per cent from estimated 3.8 per cent during the last year. The report holds out the possibility of much stronger slowdown in American economy, leading to sustained risks. These include dollar losing its value too fast or inability of the United States to draw outside investments.

The report expresses concern over widening current account imbalance across the regions and countries. The US, it said, is running a current account deficit around US$ 900 billion matched by surpluses generated by Germany, Japan and, more importantly, by developing regions and economies in transition including major oil exporters.