Thus while a sustained recovery in the US is critical to ending the global financial crisis, and is good news, in the short run it introduces increased risks and volatility with consequences for growth, capital outflows, commodity prices, exchange rate depreciation and inflation in many emerging markets. But this volatile global financial market environment is not the only challenge facing us.
The possibility of a slowdown in China poses further risks, not only to the growth recovery in the advanced economies, but also to emerging markets in general. Trade and investment linkages with China have increased markedly in recent years, and a slowdown could adversely affect these trends.