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Short-term financial stability risks rise – IMF

The International Monetary Fund (IMF) said that short-term financial stability risks have increased somewhat against the backdrop of slightly tighter financial conditions.

In its Global Financial Stability Report, the IMF said the medium-term risks are still elevated, as financial vulnerabilities, which have built up during the years of accommodative policies, could mean a bumpy road ahead and put growth at risk.

Although emerging markets have generally improved fundamentals, they could be at risk of sudden tightening of global financial conditions.

The Fund also cautioned that policymakers and investors should remain wary to the risks of rising interest rates and higher market volatility.

Meanwhile, German economic sentiment deteriorated sharply in April to the lowest level in more than five years, shifting to -8.2 compared to the previous month’s reading of 5.1, according to the Centre for European Economic Research (ZEW). Growing fears of a trade war between the US and China, which would hurt exporters and damage Europe’s largest economy, was cited as the main reason for the drop in sentiment.

Meanwhile, the indicator for economic sentiment in the eurozone stood at 1.9, losing 11.5 points compared its reading in March.

Current situation assessment in Germany declined by 2.8 points, compared to one month before, to a reading of 87.9 points, while the eurozone’s assessment of the current situation was up by 1.5 points to 57.7 points.

Finally, in the UK, house prices in London recorded their first annual fall in nearly 10 years in April. Data from the Office for National Statistics show the average price of a home in London fell by almost £5,000 over the 12 months to February.

The central borough of Tower Hamlets, skirting the eastern edges of the City of London and encompassing the financial district of Canary Wharf, recorded the steepest falls, with average prices down by almost eight per cent.

The average price of a home in the city as a whole was £471,986, down from a peak of £488,247 last July.

This report was compiled by Bank of Valletta for general information purposes only.

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