Re yesterdays further Sub Prime Fall Oout which is ....largely...

Re yesterdays further Sub Prime Fall Oout which is ....largely totally unrelated ....to Australia and Asia...China, Japan, & India.....the IMF published this just out:


From Age Newpaper Age.com

AgeOnline.com.au.


Asia can cope...... with market turmoil: says .... IMF...(International Monetary Fund).

October 19, 2007 - 11:19PM



Australia and its regional neighbours should be able to cope with any lingering fallout from the US subprime mortgage market crisis, the International Monetary Fund (IMF) says.


It says strong economic fundamentals and healthy corporate and banking sector balance sheets in the Asia region should help to limit the adverse impact from the recent global financial market turmoil.


In its Regional Economic Outlook for Asia and Pacific - complementing its World Economic Outlook released earlier this week - the IMF says .....the risks to its forecasts are evenly balanced.

It says if financial market turbulence persists and leads to a much sharper than expected slowdown in the United States and the Euro area, it could spill over into Asia.

"The impact could be felt on a broader range of households as well as banks and corporations in mature markets," it said.
The IMF, which oversees the global financial system and provides financial assistance and advice to member countries, says investors could become more selective where they invest in Asia, although effects on the region would be mixed.


Countries requiring foreign savings to finance current account deficits, like Australia, would be negatively affected, as would high risk companies that are unable to self-fund and would need to turn to the capital markets and pay higher interest rates.


"On the other hand, lower capital flows could ease pressure on currencies to appreciate, providing some relief on the competitiveness front," it said.


The Australian dollar struck a 23 year high above 90 US cents earlier this week, a level that federal Treasurer Peter Costello acknowledge would hurt the country's exporters.


The IMF said geopolitical tension could also create a supply-related oil price spike and inflation pressures.


"Any sharp increases are likely to be passed on to consumers, especially if corporate profits or budgetary revenues decline," it said.


Conversely, the IMF says domestic demand in the region could prove more resilient than expected, providing an upside risk to economic growth, and particularly if China and India are unsuccessful in containing current huge investment through higher interest rates.

In its latest world economic outlook earlier this week, the IMF downgraded its forecast for world economic growth and warned of risks to the growth outlook.


The IMF has cut its 2008 growth forecast for the United States by 0.9 percentage point to 1.9 per cent, reflecting ongoing difficulties in the US mortgage market, which are expected to extend the decline in residential investment.


It has also downgraded growth for the Euro area, the UK and Japan, and made a modest downward revision to China's growth outlook, but is still projected to grow by a hefty 11.5 per cent in 2007, before slowing to 10 per cent in 2008.


The Indian economy is expected expand by 8.9 per cent this year and 8.4 per cent in 2008.


It expects Australian growth to be 4.4 per cent in 2007 and 3.8 per cent in 2008.

Kind Regards,

Robbo.

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