WASHINGTON, April 11: The world economy is poised for a fifth year of “robust” growth but faces headwinds from a US housing slowdown and financial market instability, the International Monetary Fund said on Wednesday.

In its latest World Economic Outlook report, the IMF said global growth would moderate both this year and next to 4.9pc, down from 5.4 per cent in 2006.

“Notwithstanding the recent bout of financial volatility, the world economy still looks well set for continued robust growth in 2007 and 2008,” the twice-yearly report said.

The 13-nation eurozone is on course to outstrip growth in the United States for the first time since 2001, although both regions are expected to lose steam this year, the Fund said.

Japan will extend its recovery from a long slump while China and India will lead developing nations' growth.

“While the US economy has slowed more than was expected earlier, spill overs have been limited, growth around the world looks well sustained, and inflation risks have moderated,” the Fund said.

“Overall risks to the outlook seem less threatening than six months ago but remain weighted on the downside, with concerns increasing about financial risks.” The IMF fretted about the potential for a sharper slowdown in the US, whose gross domestic product (GDP) growth was forecast to dip to 2.2 per cent in 2007 from 3.3 per cent last year.

That was a big downgrade from the 2007 growth pace of 2.9 per cent that the IMF had predicted in September.

There are “some very tentative signs” that the US housing market could be stabilising, having endured a marked cooling from years of red-hot growth, but the Fund said the property shakeout has some way to run.

After turmoil on global equity markets in late February, the report also highlighted “the risk of a deeper and more sustained retrenchment from risky assets if financial markets continue to be volatile.” Overall, however, the Fund said the volatility “seems to be more of a modest correction after a period of rising asset prices, rather than a fundamental change in market sentiment.”—AFP