  In China and other emerging economies, the deceleration in growth has been greater than anticipated, reflecting past policy tightening and weaker external demand.   This slowdown in global activity has led to a sizeable reduction in commodity prices, although they remain elevated.
The combination of increasing global excess capacity over the projection horizon and reduced commodity prices is expected to moderate global inflationary pressures.   Global financial conditions have also deteriorated since April, with periods of considerable volatility.   While global headwinds are restraining Canadian economic activity, domestic factors are expected to support moderate growth in Canada.