WASHINGTON, April 11 (Xinhua) -- World economy risks appear more evenly balanced compared to six months ago, but remain weighted on the downside, according to the World Economic Outlook released by the International Monetary Fund on Wednesday.
"Downside risks related to the U.S. housing sector, supply-side inflation pressures, the oil market, and from a possible disorderly adjustment of global imbalances are all seen to have receded somewhat in recent months," said the report, adding however that these problems still "raise concerns."
The report said the U.S. housing market has seen tentative signs of stabilization at least on the demand side, as sales of existing homes, mortgage applications and potential homebuyer intentions have generally steadied or improved.
"However, the housing correction still has a way to run. Housing starts and permits are still heading downward, while inventories of unsold new homes are at their highest levels in 15 years," it said.
Moreover, there has been rising stress in the subprime sector of the market, which represents about 12 percent of the total U.S. mortgage market, in the form of sharp increases in delinquency and default rates, according to the report.
It concluded that U.S. household finances still look solid, but warned that the negative development in U.S. housing market could imply a deeper and more prolonged slowdown or even a recession in the United States, with potential spillovers to other countries.
The report also pointed out that inflationary pressures in the advanced economies have generally eased, but concerns remain. For example, inflation in the United States and Britain is above the two countries' central banks' target.
Meanwhile, a rebound in oil prices since early 2007 has provided a reminder that the oil market remains an important source of potential volatility.
"Spare capacity remains quite tight, and a deterioration in security in the Middle East or supply-side disruptions could still lead to another oil price spike," it said.
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