However, the positive outlook is still facing huge challenges stemming from uncertainty in the political and economic policies, such as general election in major European economies, as well as in the policy fronts, including trends towards trade protectionism by some Advanced Economies.
The downside risks would produce some degree of financial tightening, causing more volatility of capital flows while generating negative spillovers, especially to Emerging Markets Economies. In the longer term, global economy is also facing persistently low productivity in both Advanced Economies and Emerging Market Economies. 6.