Global growth has slowed in recent months, but we still expect world GDP to expand by just over 3% this year and next. The slump in oil prices should have a positive impact overall, even though it will impose significant costs on net oil exporters. Lower commodity prices will also lead to a period of deflation this year in most advanced economies. Inflation should rebound towards central bank targets in the faster-growing economies but will probably remain worryingly low in the euro-zone and Japan. While prospects for emerging economies are mixed, the gradual slowdown in China has reduced the risk of a future credit crunch.
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