The world economy is universally believed to witness further robust global growth and generally subdued inflation in 2005, the Bank for International Settlements (BIS) said Monday in its annual report.

However, recent developments in commodity and financial markets serve as reminders of key risks to this scenario, according to the report.

Oil prices may well remain high for some time, and further rises may hurt the global economy more than is currently expected, BIS estimates.

A return of unusually low long-term interest rates to more normal levels could curtail spending by households, it adds.

Moreover, there has been little progress in tackling internal and external imbalances.

Household debt has continued to rise and savings have declined in many advanced industrial countries with fiscal deficits remaining high, says BIS.

In addition, it adds, the reduction of current account imbalances, which have widened further since the beginning of the year, remains a major global challenge.

According to the report, the world economy grew strongly in 2004, supported by expansionary monetary policies and unusually accommodative financial conditions.

The Basel-based BIS is an international organization which fosters international monetary and financial cooperation and serves as a bank for central banks.

Established in May 1930, BIS is the world's oldest international financial organization.

Source: Xinhua