There are signs that the slowdown in major seven growth may be coming to an end in the first and second quarters of 1992. The provisional first quarter data for the US indicated that growth had been slightly stronger than we had anticipated. However there are signs of continued weakness in the Japanese economy, and output growth throughout Europe has been below capacity. We are not expecting a sharp upturn in world activity, and we do not expect capacity utilisation rates to rise substantially in the near future. Chart 1 plots past data and our forecast of output growth in the major four economies. We believe that the last quarter of 1991 was the trough of the downturn in the US, Japan and Germany, and that growth will be higher in 1992 in the US and Canada than it was in 1991. Table 1 gives a summary of our forecast. The slow improvement in capacity utilisation that is shown in chart 2 is a major factor behind the rather optimistic outlook for inflation. Inflation is expected to fall in all of the major economies in 1992, and to rise only very slightly in Japan and Canada in 1993.