Our latest global forecast, published today (free registration required), features an upward revision. We now expect global GDP growth to reach 4% this year (at purchasing-power parity), up from 3.8% a month ago.

The forecast for US GDP growth in 2011 is now 2.7%, up from 2.2% last month. A second round of fiscal stimulus, rising retail sales and improving industrial production underlie the upgrade. The other major factor driving the global revision is more robust growth in the euro area, where we expect expansion of 1.5% this year, up from 0.9% last month. This is thanks largely to Germany, as its export-led recovery appears to be broadening out, with domestic demand playing a larger role.

China is expected to grow by 8.8% this year, a benign slowdown from an estimated 10.2% in 2010. This will feed through to growth of only 1.3% in Japan in 2011, down from an export-driven jump of 4.3% last year.  

Despite the sunnier forecast, daunting risks remain. The fiscal outlook in America is dire and the stability of the euro area is as tenuous as ever. Meanwhile, rapid growth in emerging markets has given rise to fears of overheating, particularly in China and Brazil, with stubbornly high inflation threatening to trigger an abrupt tightening of policies.