Despite the recent run of bad news, particularly from Europe, we do not believe that the world economy is about to slow sharply. There is still ample spare capacity for growth and plenty of room for further policy stimulus where it is needed most. Meanwhile, the news from the US and UK has been good. However, downside risks abound: the recoveries in the euro-zone and Japan will remain fragile and over-investment in the property market poses a serious threat to China.
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