IMF has warned of the increasing likelihood of a global slowdown because of high oil prices and a cooler US housing market, in its latest Global Financial Stability report. In this report the IMF has highlighted what it considers the biggest threats to continuing global growth.

The report said that rising oil prices coupled with recent figures showing that the sale of US new homes fell by 4.3 per cent in July - the biggest fall since February - have sparked fears of a wider economic downturn.

The IMF report, released ahead of the IMF and World Bank's annual meetings in Singapore, cautioned that the US dollar could fall unless policies on savings and investment imbalances were corrected.

The report comes close on the heels of China announcing having posted its highest ever trade surplus of $18.8 billion trade surplus with the rest of the world in August, which economists and even the US say is because the Yuan, China's currency is kept low to ensure cheaper exports.

This is in sharp contrast to the trade deficit of $64 billion in the US, the world's largest economy.

Leaders from the Group of Seven richest nations and finance ministers are already in Singapore to discuss policy measures to correct growth imbalances.

The report notes, "The recent market turbulence is a timely reminder for authorities to strengthen macro-economic policies and persevere with needed structural reforms. The potential for a disorderly unwinding of the global imbalance remains a concern."

In its report, the IMF urged Asian nations to aim for greater exchange rate flexibility, and said Europe and Japan should improve structural reform.