A fragile calm appears to have descended on global financial markets after several waves of turmoil driven by fears that the US economic convulsions, triggered by the nation's mortgage industry meltdown, could span out around the world economy.

But the risk of further market upheavals remains high. The new first-quarter corporate reporting season is under way and economists warned it would take some time for the tremors from the first major financial crisis of the 21st century to work their way through the global economy.

"The worse news might not emerge until 2009," Kenneth Wattret, BNP Paribas' chief eurozone economist, told Deutsche Presse-Agentur dpa. Surging oil prices are prompting worries about renewed inflationary pressures at a time when economic growth is sliding.

Indeed, the global economy has entered an uncertain period with the credit crunch and the US mortgage market crisis undercutting the world's economic growth prospects for the year ahead.

The US mortgage market upheaval and plunging house prices have not only badly shaken economic confidence in the US and rattled consumers in the world's biggest economy, they also led to the property bubble bursting in parts of Europe while at the same time raising the prospects of a shakeout in Asia's key export markets.

"One lesson that I thought policy-makers had learned from the 1997 crisis was that there was a need to protect their economies from external shocks," said James McCormack, managing director for Asia-Pacific Fitch Rating, a country and corporate risk-rating agency.

"But economies across the (Asian) region actually rely now more on external demand than they did before the 1997 crisis, so if that was one of the lessons, it wasn't learned," McCormack said.

Set against the backdrop of the US presidential election campaign, the troubled US economy has also helped to stoke a debate about what has gone wrong with the international financial system, and what can be done to fix it.

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