Global economic growth slowed in the first quarter, but we expect it to rebound in the second. The US economy looks set to regain momentum as consumption seems almost certain to pick up. Meanwhile, growth in the euro-zone was already quite strong in the first quarter and survey evidence suggests that it will accelerate further, while activity in the UK should also recover. In contrast, the fall in China’s PMI in April is another sign that its economy has started to slow. Provided the April and May non-farm payroll numbers for the US are reasonably strong, the Fed is likely to raise rates again in June. But with underlying inflation still well below target in the euro-zone and Japan, central banks there will be in no rush to signal an end to ultra-loose monetary policy.
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