G20 and OPEC meeting on the weekend

The group of 20 finance ministers and central bankers met in South Africa this weekend. They noted in their communique that the downside risk to the near term outlook for global growth had increased and named the culprit as the recent financial market turbulence. Economists, central bankers and finance ministers from Europe to South Africa expect slower growth ahead. This is not supported yet by economic statistics but is plausible given the current turbulences in the credit markets and their expected knock on effects. The slump in global credit markets will force banks, brokerages and hedge funds to cut lending by $2 trillion, triggering the risk of a ``substantial recession'' in the U.S., according to Goldman Sachs report that come out last week.
South African finance minister Trevor Manuel, this years host of the G20 meeting, said that all of the G20 members ascribed to the notion of an expansion of the so called Group of Seven. "it's time for a new arrangement in the world," he told reporters.

The world has also changed some for those who have to deal with a weak dollar. This weekends OPEC meeting had Iran and Venezuela proposing trading oil in a basket of currencies to replace the historic link to the dollar, but they had not been able to generate support from enough fellow OPEC members. The final declaration delivered Sunday did not specifically mention concern over the weak dollar.

Over the pond UK house prices grew at their weakest annual rate for 17 months in November according to online estate agent Rightmove. House prices were down 0.7% on the month but were still 7.9% higher on the year. The fear of a US style housing slump is growing. In the meantime the Institute of Chartered Accountants of England and Wales said yesterday that its business confidence index plummeted nine points last quarter from +4.9 to -3.9, suggesting respondents are becoming markedly less confident in future prospects.

Singapore on the other hand is confident about the outlook for the economy and has lifted its growth forecast for 2007 and 2008 on strong Asian and European growth and somewhat weak growth in the US, the ministry of Trade and Industry said Monday.

To help cool the Chinese economy the Chinese government has asked banks to temporarily freeze lending until the end of this year, the Wall Street Journal reported on Monday.