World output is projected to expand by 3 percent in 1994 and by 3¾ percent in 1995 as the global economy continues its gradual recovery (Table 1). The expansions that are now clearly under way in North America and the United Kingdom contrast with continued sluggishness in continental Europe and Japan. Developing country growth is expected to remain robust on average, although disparities remain large and the short-term outlook for the poorest countries has not improved substantially. Overall output in the countries in transition is expected to decline substantially again in 1994, although growth is beginning to pick up in most of central Europe and the Baltic countries. In all regions except the former Soviet Union, significant progress in reducing inflation has already been achieved or is anticipated in the near term. The successful conclusion of the Uruguay Round of trade negotiations in December 1993 stands out as a major policy achievement. This has removed a substantial downside risk to the prospects for world growth and is expected to support recovery in the short term by bolstering confidence and increasing incentives for investment.