Our view of the world economy in the short‐term has become more downbeat. However, the slowdown which emerged last year is still expected to prove short‐lived and we expect economic prospects to improve over the course of 1996. Interest rates have fallen and the ability of the monetary authorities to relax policy against a background of low inflation provides a safeguard against a more severe slowdown. The world economy will also be supported this year by recovery in Japan and the continued buoyancy of the Asia/Pacific reg