Global GDP growth remains lackluster, atan estimated 2.4 percent in 2015, down from 2.6 percent in2014. This performance reflects sluggish world trade,particularly merchandise trade, and persistently weakcommodity prices. These trends are contributing to subduedinflation in advanced economies and commodity-importingemerging market and developing economies (EMDEs), whileconsumer prices are elevated or accelerating in manycommodity-exporting EMDEs. Despite the headwinds to growth,financial conditions in EMDEs have improved somewhat sincethe start of 2016. Asset prices and capital flows haverebounded, while bond spreads have receded. EMDE exchangerates have rallied somewhat against the U.S. dollar afterplunging during the past three years. Oil prices have risenfrom January lows, although they remain low versushistorical levels due to bothsupply and demand factors.Economic performance in large emerging markets—includingmultiyear contractions in Brazil and Russia and continuedrebalancing in China could set back any improvement in thepace of global growth in 2016. With their high dependence onthe oil sector for government and export revenues, theprolonged period of low oil prices continues to havedetrimental impacts on GCC economies. Budget rebalancing isunderway, but further fiscal consolidation is likely in themedium term given that oil prices are expected to recoveronly gradually. Slowing growth in GCC countries stands togenerate negative pillovers for oil-importing countries inthe Middle East and North Africa through trade, investment,and remittances channels.
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