Companies have been willing to invest in equipment because they are confident they will be able to sell their end product. Demand has picked up in the last year and that is reflected in better economic growth figures. According to Consensus Forecasts, the world expanded by 2.5% last year compared with 1.9% in the previous 12 months. Henderson Global Investors director of global economics and strategy Tony Dolphin says governments have played a “huge” role in boosting demand. This, he says, can be seen from looking at the US where tax cuts have been the key: “The stimulus we have seen in the US has been massive. It has gone from a sizeable budget surplus to a large deficit. It has been a huge support to the economy.” Managers believe tax cuts are going to continue to play an important role into 2004, and numbers produced by Consensus Forecasts indicate that things are going to continue to get better this year. The group expects the world economy to step up another notch in 2004 and grow by 3.5%. Behind this headline figure lurks the influential US economy. Consensus reckons the US will grow significantly quicker in 2004, expanding at 4.4% – up from 3.1% in 2003. Other industrialised countries are not that far behind the US, with Canada and the UK forecast to expand at 3% and 2.7% respectively. For Japan, the forecaster has 2.1% on the table. The eurozone is also looking in good shape and is set to grow by 1.8% – quite a turnaround from last year. By the second three months of 2003, Germany and Italy had joined the Netherlands in recession and, to make matters worse, France’s economy had also contracted in that quarter. Data from the EU’s statistical agency, Eurostat, showed first estimates of GDP for both Germany and Italy contracting by 0.1% in their second consecutive quarter-on-quarter fall, and output from the Netherlands shrinking 0.5%. Overall growth for the EU member states was at zero, while the eurozone saw a 0.1% contraction. As in the US, Dolphin says fiscal stimulus has been important in Europe. And HSBC European Growth fund manager Jeffrey Currington and Threadneedle European Select Growth deputy fund manager Phil Cliff are both optimistic on the role of taxes in the eurozone in 2004.