Last year the global economy grew by 5 per cent, its fastest rate of growth in almost three decades; this was two and one-half times the rate of growth of the euro area. Driven by the strength of economic activity in the US and Asia, the global economy grew rapidly in the four quarters to mid2004.
The strength of global growth during this period was supported by favourable financial conditions and stimulative macroeconomic policies in many countries. In the US, growth acquired considerable momentum from the sizeable fiscal and monetary policy stimulus which had been put in place earlier. In addition, supportive wealth effects from equity and housing markets also helped propel growth.