The short-term prospects for the world economy appear to have brightened since the beginning of this year. Growth has continued at a rapid pace in the North American economies, helped by the prompt monetary response of the Federal Reserve to the turbulence in the global financial and currency markets in the latter half of last year and renewed vigour in equity prices. GDP in the United States is expected to rise by close to 4 per cent for the third year in succession. Some improvement in growth prospects now appears likely in Europe. After the marked slowdown at the turn of the year economic activity in the Euro Area and the UK appears set to return towards trend rates from the second half of this year, helped by relaxed monetary conditions.