The World Economy

Abstract

While at a global level the outlook for growth remains strong, with GDP growth expected to exceed 4.5 per cent per annum until 2008, we have started to see some shift in the regional composition of growth, with a more dominant role for the Euro Area and Japan and weaker prospects in the US. Oil producing economies are also expected to record strong growth over the next few years, although the recent drop in the oil price has dampened the outlook for these economies slightly. China will continue to expand at a rapid pace, albeit with some easing from the exceptional growth in the first half of this year. Euro Area growth outpaced both the US and Japan in the second quarter of 2006, for the first time since 2001. This acceleration in Euro Area growth was dominated by private sector investment, supported by strong corporate profitability, rising capacity utilisation and low real interest rates.