The sharp fall in world output which occurred in the middle of 1980 was halted in the fourth quarter when world industrial production rose 1–2 percent. We believe however that the recession has not yet run its come and that a further fall in output will occur in the first half of 1981. In particular we are sceptical that the recent recovery in the United States can be maintained while inflation remains in double figures. We are not looking for a sustainable world recovery until the middle of this year by which time OECD inflation should be well down into single figure