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Abstract
World output growth is expected to increase further, to about 4½ percent, in 1997 and to remain at this rate in 1998, projections that arc slightly higher than those in the October 1996 World Economic Outlook. Relatively solid growth is expected in the United States and the United Kingdom, although in both countries there is a risk of inflationary pressures emerging. In Canada, where there is considerable economic slack, the expansion is expected to gain momentum. In Japan, recovery is expected to continue at a moderate pace. Declines in interest rates over the past two years and the return of exchange rates to more competitive levels are expected to support recovery in Germany, France, and elsewhere in continental Europe, although continuing fiscal consolidation and weaknesses in consumer and business confidence pose downside risks. Growth in the newly industrialized economies of Asia should also pick up slightly in 1998, as exports recover from the recent slowdown.
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