The tail risk that the European debt problem will lead to global financial market turmoil and a significant global economic downturn has decreased on the whole, although considerable uncertainty remains. The recent stability in prices of primary commodities is another positive factor (Chart 28).
The two main risk factors to the outlook for the global economy that warrant attention are (1) as mentioned earlier, the effects of the reduction in the pace of asset purchases by the Federal Reserve on global financial markets, especially on emerging economies’ markets; and (2) the global disinflationary trend.