Credit Crunch to Hit Hardest in 2008

September 24 2007 CNBC.com Most of the impact of the global credit crunch will be felt in 2008 and the United States will be hardest hit, International Monetary Fund Managing Director Rodrigo Rato said on Monday. World economic growth should remain high next year but looks set to be below the levels of 2006 and 2007 and downside risks increase the longer financial markets remain in crisis, Rato told a seminar in Madrid. "Credit markets are correcting, but slowly, we aren't at a stage of normality," Rato said, adding that most countries should be able to cope with the financial conditions. "It has an effect on the real economy which will be felt more in 2008, with greater intensity in the United States, less in other areas," he said. Rato saw no quick fix for the global credit crunch triggered by defaults on U.S. subprime home loans to borrowers with poor credit histories.

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