Short-term risks remain slanted to the downside in the coming years and there are three broad concerns on the global economic growth beyond geopolitical risks, the International Monetary Fund (IMF) said on Wednesday.

In its latest World Economic Outlook report released before the 2005 annual meeting of the World Bank and the IMF, the IMF said high and volatile oil prices remain a significant risk for the global economy.

"With recent oil price increases owing less to demand pressures, further price increase could have a less benign impact, especially if they had a significant effect on consumer confidence and therefore spending," the report said.

The IMF also warned that the impact of higher oil prices on inflationary expectation could become much more marked, raising the risk of a sharp rise in interest rates, and adverse supply-side effects would cause much greater concern.

The report said another risk is that protectionist sentiment is rising, driven by global imbalance and growing fears of emerging market competition. The removal of quotas on textiles and clothing has also triggered protectionist sentiment, including renewed restraints on exports from China, in many countries.

Financial market conditions could tighten significantly, which is of particular concerns as a result of a jump in inflationary expectation rather than a more gradual adjustment in savings and investment in the Asian region, the report said.

Meanwhile, the IMF said that in spite of these risks, the short-term outlook of the world economy remains generally solid, with the global economy having proved remarkably resilient to the shocks of the last several years.

Source: Xinhua