Recovery to remain subdued

The world economy is likely to grow at a moderate pace this year and next. The US should be able to withstand a gradual withdrawal of stimulus by the Fed, and Japan is on track for steady growth, helped by its central bank. However, we expect the euro-zone recession to drag on for some time yet, despite some signs of improvement. Meanwhile, China and some other key emerging economies have suffered a structural slowdown. Against this backdrop, inflation should remain very low and commodity prices will probably drop further.