The International Monetary Fund says the world economy will slow sharply this year, with the United States sliding into a recession amid housing, credit and financial slumps.

Simon Johnson is IMF chief economist.

"In the United States, economic growth has nearly stalled. Against the backdrop of weak financial market confidence, we expect consumption to remain sluggish in the coming quarters due to deteriorating labour market conditions, slow growth in disposable incomes, higher energy costs and tighter constraints on household borrowing."

The outlook predicts the US will suffer a "mild'' recession in 2008, and it won't fare much better next year.

Against that backdrop, the IMF expects the world economy to lose considerable momentum with a projecting growth by 3.7 percent this year and 3.8 percent next year.

By contrast, growth in emerging and developing economies is expected to ease modestly but remain robust in both 2008 and 2009.

However, the IMF says it still views the US currency and the euro value as "somewhat on the strong side", while the yen remains "somewhat undervalued."