But overall, barring a sudden and major further intensification of contractionary forces in Japan, there are reasons to think that global economic activity will begin to improve this year. A pretty strong policy stimulus has been applied, led by the United States, in a timely fashion. Global short-term interest rates are unusually low.
In addition, the price of oil, which played an important role in producing the slowdown, has fallen substantially over the past year. These two factors, plus the outworking of inventory overhangs, would usually be enough to produce a cyclical upturn. As I have sketched above, we can see evidence beginning to appear which is consistent with that view.