This annual report considers trends and prospects for the global economy and the international trading system, capital flows and finance issues. The second part of this year's report focuses on issues of policy coherence in development strategies, international trade and globalisation. It examines how trading relations are affected by international monetary and financial systems, and how financial and monetary instability can affect the capacity of developing countries to participate successfully in the international trading system. It also discusses exchange rate management at national and international levels, and its contribution to job creation and poverty reduction.