World growth encouraging, risks low

World growth encouraging, risks low

BASEL – The world economy is on track for a fifth year of strong growth, little hampered by a limited slowdown in the United States, central bankers from the world’s leading economies agreed yesterday.

Summing up the sentiment at talks on the global economy hosted by the Bank for International Settlements, Group of 10 chairman Jean-Claude Trichet said risks of an upset to the favourable outlook remained, but appeared unlikely to materialise. “We continue to observe in the baseline growth which is one of the most encouraging we have observed,” he said.”(Risks) are of a low probability …but each of these risks if they would materialise would be grave.”Trichet listed a trend to more protectionism in trade and foreign investment, a disorderly unwinding of global imbalances and market underpricing of risks and the outlook for oil and commodity prices as key risks to the outlook.He said central bankers expected a slowing in growth in the United States to be limited, and domestic dynamism elsewhere – including the euro zone – meant the global economy would absorb this well.Economists question whether a US housing slowdown, the danger of further oil price increases or a possible US dollar rout would ripple through the rest of the world and upend an otherwise robust global picture.But Trichet’s assessment downplayed these dangers.Nampa-Reuters”We continue to observe in the baseline growth which is one of the most encouraging we have observed,” he said.”(Risks) are of a low probability …but each of these risks if they would materialise would be grave.”Trichet listed a trend to more protectionism in trade and foreign investment, a disorderly unwinding of global imbalances and market underpricing of risks and the outlook for oil and commodity prices as key risks to the outlook.He said central bankers expected a slowing in growth in the United States to be limited, and domestic dynamism elsewhere – including the euro zone – meant the global economy would absorb this well.Economists question whether a US housing slowdown, the danger of further oil price increases or a possible US dollar rout would ripple through the rest of the world and upend an otherwise robust global picture.But Trichet’s assessment downplayed these dangers.Nampa-Reuters

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