Recovery and interest rates

摘要

Prospects for 2004 appear stronger than at any time since 2000. Growth forecasts have been upgraded considerably in the past few months. In the US, which is leading the recovery, the consensus is that GDP will grow by 4.5%-5% in 2004. China, which is an increasingly important global player, recorded spectacular growth of 9.1 % in 2003, and is expected to expand by 8%-9% in 2004Japan and the euro area will deliver only puny growth of some 2% this year. But fears of deflation and recession have faded, and a 'synchronised recovery' in all the world's main regions has created expectations that interest rates will have to be raised markedly, to prevent an inflationary upsurge further down the road.