Global growth has slowed amid the turmoil in financial markets, and risks remain to the downside, the International Monetary Fund said today.

In updating its World Economic Outlook, the fund said the world economy should slow to a 4.1% growth rate in 2008 from an estimated 4.9% in 2007.

That amounts to a 0.3 percentage point reduction in its growth estimate for this year from the World Economic Outlook released in October, taking into account a recent update in the model used to measure growth that resulted in about a half-point reduction in its forecasts from 2005 to 2008.

The U.S. economy is the main drag on the world economy, expected to decelerate to 1.5% growth in 2008 from an estimated 2.2% rate last year. The 2008 forecast is a reduction of 0.4 percentage point from the revised October estimate.

The IMF cut its 2008 forecast for the euro area to 1.6% from an initial estimate of 2.1%, citing an overall deterioration in confidence. The region is estimated to have expanded at a 2.6% pace last year.

Japan’s forecast for this year was trimmed by 0.2 percentage point to 1.5%, on the back of an estimated 1.9% growth rate in 2007.

Emerging market economies have been “resilient”, the fund said, benefiting from domestic demand and more disciplined macroeconomic policies.

China is expected to grow 10% in 2008, compared with11.4% last year. Latin American economies are expected to slow to 4.3% this year from 5.4% in 2007.

The balance of risks for global growth remain to the downside with the biggest concern being that the troubled financial markets do more damage to domestic demand in advanced economies and spill over into emerging markets.

Other risks include rising inflation in both advanced and emerging economies, as well as continuing global imbalances, the report said.

Warning that a deeper downturn in the U.S. or elsewhere could cause a more broad deterioration in credit beyond the crisis in the U.S. subprime mortgage market, the fund said that policies are needed to address both near-term strains and long-term stability.