one - third of a percentage point in 2018. 4 inflation in the euro area reached 1. 5 % in 2017 and is expected to decline slightly to 1. 4 % in 2018, largely a reflection of developments in international oil prices. inflation is expected to move gradually up thereafter to 1. 7 % in 2020, reinforced by the ecb ’ s accommodative monetary policy, robust economic activity and projected labor cost increases, as the level of underemployment of the workforce will decrease. 5 the governing council of the ecb is more confident that inflation will reach a level of below, but close to, 2 % over the medium term. at the meeting of march 8, the governing council of the ecb introduced a further gradual adjustment to the monetary policy stance, removing from the official communication the so - called app easing bias 6. however, the governing council still needs to see further evidence that inflation dynamics are moving in the right direction. so monetary policy, as president draghi and other members of the executive board of the ecb have put it, will 1 / 9 bis central bankers'speeches remain patient, persistent and prudent. t h e risks surrounding the forecasts for the global and european economies appear to be balanced in the short term, under the positive effect of accommodative monetary policy in advanced economies and the recovery of international trade. however, they are tilted to the downside in the medium term as interest rate hikes as a result of the normalization of monetary policy in advanced economies ( which is under way ) are expected to burden the service of high total public and private debt and to dampen growth dynamics. downside risks relate to : - rising protectionism and in particular the possible spillovers of the new trade measures announced by the us administration. an escalation of trade tensions, the intensity of retaliation and their potential negative confidence effects, would weigh on world trade. these measures already affect stock markets. - the possibility of tighter global financial conditions as well as potential sharp correction in financial markets, triggered by a faster than expected tightening of us monetary policy and / or a reassessment of investors ’ risk appetite. in this context, talking down currencies exacerbates exchange rate volatility which is harmful for global and euro area growth. - the outcome of brexit negotiations. - geopolitical tensions in the middle east, the korean peninsula and iran, as well as a possible resurgence of the

. oil prices rallied to above usd50 per barrel from an average of usd33 per barrel in the first quarter of the year, and today, oil prices have settled back to around usd48 per barrel. the oil price is likely to remain volatile over the next few years due to oversupply and recordhigh oil inventories against slow demand especially in china. lng prices are also expected to remain low for a protracted period of time. lng capacity start - ups in australia and north america which will boost new lng supplies amidst stagnating demand will put more pressure on lng prices, hence further disrupting the lng market. due to low oil and lng prices, the profitability of oil majors and national oil companies ( nocs ) has been severely eroded. the impact has been pronounced. more than 300, 000 oil and gas workers have been laid off globally since mid - 2014 ; some usd 380 billion of global oil and gas projects have been deferred or cancelled ; and more than usd 150 billion worth of assets have been planned for disposal or divestment. given malaysia ’ s openness and high financial and trade integration with the rest of the world, the malaysian economy is not isolated from these developments. on the external front, lower global demand continues to weigh down on malaysia ’ s export performance. investment activities especially in the upstream oil and gas sector, contracted for the first time since the global financial crisis in 2015, after expanding by an average of 16 % from 2010 to 2014. however, investment activity in the manufacturing and services sectors remained bis central bankers ’ speeches resilient, and is expected to underpin investment growth moving forward. private consumption remained relatively resilient and anchored domestic growth, especially during the first half of the year, driven by sustained income and employment levels. going forward, domestic demand is expected to remain a key driver of economic growth in malaysia. we should expect malaysian economic growth to range between 4. 0 to 4. 5 % for 2016. amid the changes in the financial landscape, there have been equally significant developments in the auditing standards both globally and locally. the standards and regulations are becoming increasingly tighter and more stringent. the institute of internal auditors ( iia ) for example, has proposed several changes to the internal audit standards, which are expected to take effect in january 2017. the changes to the standards are aimed at reinforcing the fundamental principles of internal auditing practices, promoting a broad range of