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How far will the fiscal stimulus boost growth?

The recent run of stronger economic data has prompted us to raise our fourth-quarter GDP growth forecast to 4% annualised, from 2.5%. Based on the higher starting point for GDP going into next year and the new fiscal stimulus, which is worth an additional $300bn (or 2% of GDP) above what we previously had factored in, we now expect growth to average 3% in 2011.

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