Tuesday, April 11, 2006

Global Trade, World Financial Markets Strong ...For Now

Financial system strong but challenges emerging: IMF By Katie Allen and Fiona Shaikh, London(Reuters)

WTO Sees Global Trade Growth Quickening in 2006 Geneva(Reuters)

Earlier this week the World Trade Organization (WTO) said that global trade may grow 7 percent in 2006, up slightly from 6 percent last year, but warned the outlook was uncertain.

Among downside risks is the possibility that U.S. economic growth could slow more than expected because of higher real interest rates and energy costs, it warned.

The International Monetary Fund voiced similar warnings this week. In its latest Global Financial Stability Report the IMF said that major cyclical risks that lay ahead for financial markets stemmed from higher interest rates and/or higher inflation, worsening credit quality of various debtors and a sudden unwinding of global imbalances. On house prices, it said U.S. housing market activity appeared to have slowed recently in response to higher interest rates in the world's largest economy, where the Federal Reserve raised borrowing costs for the 15th straight time last month.

But while there were concerns higher rates would raise households' debt servicing burdens and softer prices could curb consumption, the Fund noted "prospects of a soft landing" judging from trends in Britain and Australia's housing markets.

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