After several years of robust growth, the world economy today faces some serious and unenviable challenges. The US housing bubble of 2007 and the unfolding credit crisis, the decline of dollar vis-a-vis other major currencies, the persistence of large global imbalances and high oil prices threaten the sustain-ability of global growth in the coming years. The world economy is projected to grow at 3.4 per cent in 2008, compared to 3.7 per cent in 2007 and 3.9 per cent in 2006, according to the 2008 update to World Economic Situation and Prospects. The un-prepared study entirely blames the bursting of the US housing bubble and the crisis over 'subprime', or risky, mortgages for causing uncertainty across global financial markets. The study argues that the imbalances between countries running trade surpluses - including China, Japan and major oil producers - and those with big deficits, especially the US, could drag world output down. The US problems "could trigger a worldwide recession and a disorderly adjustment of global imbalances," the report says. "The recent global financial turmoil has heightened these risks and shown them to be clear and present dangers." No doubt, some ingredients of current economic mess have changed for good. The US dollar is regaining its strength and oil prices have slumped to $100/barrel level, after threatening to touch $150 and above just a couple of months ago. But the recovery of business confidence is nowhere in sight, at least among the developed economies. In contrast, the study points out a more positive picture for developing countries' economies, Which grew at nearly 7 per cent for a third straight year, helped by high commodity prices. This could continue in 2008 but not at the robust rates of earlier years, the study notes. It strongly advocates reforms and regulations so as to ensure an orderly unwinding of the global imbalances and the growth of global output. "Without the reform, concerted action to address the problem of the imbalances in the world will likely remain far removed from what is needed and enhance the risk of a much deeper slowdown in world economic growth," the study warns. The report, compiled by seven un bodies, contains about 30 pages of statistical tables and the chapters on the world economic situation, global outlook, international trade, financial flows to developing and transition countries and regional developments. To that extent, it is an authoritative and reliable insight into current trends and policies in world economy and is an essential resource to both private sector and the academia.