Clouded outlook for the world economy

Global growth has slowed down recently. While the world economy should gradually regain pace over the coming quarters, overall growth momentum is expected to remain subdued. The recent drop in oil prices has not improved the outlook as it to a substantial degree signals weaker demand; additionally, lower prices will continue to be a drag on activity in oil-exporting countries. Increased uncertainty is also weighing on growth. Against this backdrop, our forecast for world economic growth in 2016 has been revised down by half a percentage point to 2.9 percent. For 2017 we forecast global GDP growth of 3.5 percent (December: 3.7 percent). Activity in advanced economies will be supported by rising income and expansive monetary policies. Emerging economies, however, face both structural and cyclical headwinds. Although the current dismal performance is expected to improve over the forecast horizon, growth will remain low by historical standards.