The international environment

• Many of the major overseas economies are slowing and some are in recession, but the likely extent of the overall slowdown in world activity is difficult to gauge because of uncertainty concerning events in the Gulf.
• The divergence of economic performance among the major economies continues to increase, with the growth of output in Japan and Germany still healthy while in the United States and Canada output has fallen over recent months.
• The fall in oil prices in the fourth quarter was reflected in inflation figures at the end of the year, which were lower than many commentators had expected.

The international environment