IMF Cautions of Global Trade Danger

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The group responsible for monitoring the financial system of several countries has given alerts regarding the global trade depreciation caused by oil price hikes and the degenerating American housing market. In an announcement, the International Monetary Fund (IMF) has stated that the two industries can lead the global trade and the international economy to jumble.

The IMF is an international organization, which is composed of 184 members including the United States, was established in 1946 right after the windup of the Second World War. It was created due to the 1944 Bretton Woods Conference. The basic tasks of the fund are to lend member countries with funds and to provide financing solutions to momentary balance of payment problems. The organization is also responsible in assisting the expansion and balanced growth of global trade and the international economy, and in ensuring international monetary cooperation among member nations. The said organization played an active role in the economic and financial rules and policies of some highly obligated member countries and in the maintenance of the nation’s monetary stability.

The organization also declared that the American dollar may drop because of the disordered savings policies and asset imbalances in the global trade. It can be noted that the several groups already made an appeal to the international economy, most especially to the developed countries like Japan and Germany, to increase their expenses and not rely on the US to become the sole trade market machine.

The said announcement was promulgated even before the annual World Bank and IMF conference that will take place in Singapore this month. The conference hasn’t started yet, however, ministers of the Group of Seven (G7) affluent nations and other finance leaders are already having discussion about these policies in Singapore. In its current report, IMF emphasized the possible factors that can jeopardize the incessant global trade growth.

The fast-paced increase of oil cost in the global trade have banded together with the current figures illustrating that the market of new US homes dropped by 4.3 percent last July have fanned the flames of worries regarding an international economic backslide. The said declination in the home market is considered the most huge drop since last February.

The Global Financial Stability article released by the IMF stated that the current global trade crisis serves as an opportunely admonition for finance ministers from various communities to empower macro-economic rules and policies, and strive in implementing the much-required structural changes.

In the center of the maelstrom of issues of fear and worries about the global trade, the current report came out the day right after China announced that it had already posted a report of $18.8 billion trade balance with other nations last August. On the contrary, the US has its trade decreased to over $64bn. As a reason to the difference between the trade growth of US and China is the Asian nation’s weak currency that makes the goods from the said country to become relatively cheap resulting to the boosts in their export business.

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