WASHINGTON - The International Monetary Fund (IMF) lowered its forecasts on Tuesday for US and global economic growth in 2008 but expected that the US economy will avoid recession.

US growth is projected by the IMF to slow to 1.5 percent this year, down from 2.2 percent last year and 1.9 percent estimated by the institution in October 2007.

"Economic growth in the United States appears to have slowed notably in the fourth quarter of 2007, with recent indicators showing weakening of manufacturing and housing sector activity, employment, and consumption," said the IMF in an update of its World Economic Outlook.

Buffeted by recent financial market turbulence and a weakening US performance, the IMF said, world economic growth is projected to slow to 4.1 percent this year, down from 4.9 percent in 2007 and 4.8 percent it estimated last October.

"Financial market strains originating in the US subprime sector - and associated losses on bank balance sheets - have intensified, while the recent steep sell-off in global equity markets was symptomatic of rising uncertainty," the IMF said.

It said there was a risk that the ongoing turmoil in financial markets would further reduce domestic demand in the advanced economies with more significant spillovers into emerging market and developing countries.

"Growth in emerging market countries that are heavily dependent on capital inflows could be particularly affected, while the strong momentum of domestic demand in some emerging market countries provides upside potential," it said.

Growth in emerging market and developing countries is also expected to ease, moderating from 7.8 percent in 2007 to 6.9 percent in 2008.

In China, growth is projected to decelerate from 11.4 percent to 10 percent, which should help alleviate overheating concerns, the IMF said.

The IMF issues World Economic Outlook twice a year. The next update will be issued in April.