Growth of world economy picks up pace thanks to US

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THE global economy grew at its fastest rate for more than a year during the second quarter, according to figures released yesterday by the Organisation for Economic Co-operation & Development (OECD).

Gross domestic product (GDP) across the 34 OECD members rose by a total of 0.5 per cent in the period, the Paris-based body said.

The figures come shortly after the eurozone emerged from six straight quarters of recession to post 0.3 per cent growth for the second quarter.

Britain’s recovery has lagged behind other major economies and GDP remains 3.3 per cent off its pre-recession peak.

Yet quarter-on-quarter growth doubled to 0.6 per cent between April and June and improving data from industry – as well as better retail sales and an improving housing market – have helped to boost confidence and hopes for a sustained economic upturn.

The UK’s second-quarter growth could even be revised up to 0.7 per cent when the Office for National Statistics issues its first revision today.

The US is seen as further down the track to recovery, although fears over the withdrawal of Federal Reserve stimulus measures that have been nursing it back to health are troubling global stock markets.

Anxiety about the tapering of the support is having an impact on the world economy as investors become more anxious about emerging markets. India has been particularly badly hit.

Philip Shaw, chief economist at Investec, said: “Tapering would be a sign that the Fed believes the US economy is gaining some traction. It signals that the recovery is more solid.

“There are signs that momentum is building, albeit slowly, in the pace of the eurozone recovery, and in China too.”