Global growth rebounded in the second quarter and the latest business surveys suggest that it has picked up further at the beginning of Q3. Growing fears of a hard landing in China have weighed on sentiment and pushed commodity prices lower over the past month. But we think that growth in China will hold up well this year as recent policy easing supports a rebound in credit. Meanwhile, the latest falls in the oil price should feed through to stronger consumption growth in advanced economies. The US economy has continued to strengthen, although the improvement in the labour market has yet to generate a pick-up in wage growth. Nevertheless, with core inflation pressures building, the Fed is still likely to begin raising rates in September. But this is unlikely to knock the global recovery off course, not least because monetary policy elsewhere is set to remain ultra-loose for some time.
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