NEW YORK — The world economy, buffeted by the credit crisis gripping financial markets, is expected to keep expanding in 2008 — albeit at a slower pace — with little fear of recession. But unlike past economic upswings driven by the U.S., Japan and Western Europe, the main engines of growth this time are predicted to be China, India and other emerging economies.

In its latest World Economic Outlook, the International Monetary Fund projected that the global economy would grow by 5.2 percent this year and moderate to 4.8 percent in 2008, compared with last year's 5.4 percent growth. The 2008 forecast was downgraded by nearly one-half percentage point from the summer outlook, reflecting the turbulent conditions in financial markets.

"Risks to the outlook, however, are firmly on the downside, centered around the concern that financial market strains could deepen and trigger a more pronounced global slowdown," the IMF warned. Inflation pressures, volatile oil markets and the strong flows of foreign currency into emerging markets are also threats, it said.

The IMF said the ongoing turbulence in financial markets and a new rise in oil prices have dampened the outlook since its October update. In particular, the U.S. growth outlook has become riskier, IMF First Deputy Managing Director John Lipsky said in an interview posted on the Fund's Web site Dec. 11.

The global oil markets remain very tight, and with spare capacity still limited, supply shocks or heightened geopolitical concerns could lead to oil price spikes that could trigger higher inflation, economists said.

There is room for some cheering, though.

"The good news is that emerging and developing countries weathered the recent financial storm and are providing the basis for strong global growth in 2008," said IMF Chief Economist Simon Johnson.

"For the first time, China and India are making the largest country-level contributions to world growth," he said.

Emerging Asia is forecast to expand 9.2 this year and 8.3 percent in 2008; Africa is to grow 5.7 percent and 6.5 percent, respectively; and the Middle East, supported by high oil prices and robust domestic demand, is projected to expand 5.9 percent in both 2007 and 2008.

The IMF raised its growth forecast for China's sizzling economy this year to 11.5 percent from 11.2 percent, and said Beijing's efforts to cool the boom would be more effective if currency controls were eased. However, it said that easing may not materialize unless the authorities act more decisively and let the yuan's exchange rate rise faster.

Economic growth in the 30 industrialized economies of the Organization for Economic Cooperation and Development — which include the U.S., Britain, Germany and France — will slow to 2.3 percent in 2008 from 2.7 percent in 2007, the Paris-based think tank predicted in early December.

"Although near-term growth has been revised down virtually everywhere in the OECD area, the baseline scenario ... is actually not that bad in view of the recent shocks," said Joergen Elmeskov, the acting economic chief of the think tank.

Corporate profits, high employment that boosts income and consumption, and increased global trade have supported the world economy, while it has been hit by financial turmoil, cooling housing markets and rising energy and commodity prices, the OECD said.

The gradual slowing currently envisioned comes as the world economy's biggest player — the United States — is facing a considerable loss of speed.

The IMF lowered its forecast for U.S. growth, predicting the economy would expand by just 1.9 percent this year and next, reflecting the impact of the worst housing slump in more than two decades and the effects of the credit crisis.

If the IMF's forecast for 2007 proves correct, it would be the weakest growth the U.S. has logged in six years.

The housing slump would cost the U.S. economy a full percentage point of growth this year or one-third of the typical 3 percent annual rate of increase, economists said.

Although risks of a recession have risen in the United States, the IMF said the more likely outcome would seem to be a more prolonged period of sub-par growth.

A November survey by 50 professional forecasters of the Washington-based National Association for Business Economics trimmed the estimates for all the major U.S. economic sectors next year, with the exception of net exports and government spending, without predicting a recession.

The panelists didn't see recession as likely, although the economy faces risks from the credit markets, housing and energy prices, said Ellen Hughes-Cromwick, NABE president and chief economist at Ford Motor Company.

Other U.S. economists are less upbeat.

"Slow jobs growth, along with the shortage of business credit, declining home prices, and falling industrial production, indicate the risk of a recession is clearly above 50 percent. Either the economy has already entered a recession or the risk that a recession will begin soon exceeds 50 percent," said Peter Morici, a business professor and former chief economist at the U.S. International Trade Commission.

While overall U.S. economic growth as measured by the gross domestic product roared ahead at a 4.9 percent rate in the third quarter, the fastest pace in four years, GDP is expected to slow to a barely discernible 1.5 percent or even less in the current October-to-December quarter.

Growth at such a slow pace would increase the risks that the world's largest economy could dip into a recession.

To cushion the blow, the Federal Reserve has slashed a key interest rate three times to 4.25 percent — a nearly two-year low — most recently on Dec. 11. Fed officials signaled that further cuts were possible if housing and mortgage lending get worse.

On the positive side, the Labor Department reported the unemployment rate stayed at a relatively low 4.7 percent for the third straight month in November — better than economists were expecting — and wages grew briskly, encouraging signs that America's employment climate is still holding up in the face of credit and housing problems.

Job and wage growth have been shock absorbers, helping Americans to cope with all the negative forces in the economy.

"This should provide reassurance to those who worry that a recession is imminent," said Carl Tannenbaum, chief economist at LaSalle Bank.

Still, a lingering fear among economists is that consumers will cut back on their spending throwing the economy into a tailspin. Consumer spending accounts for two-thirds of U.S. economic activity.

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