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Global economy grows despite fears of US-China trade war

Trump tax cuts and Asian investment lift output, but inflation and tariffs loom

A steel plant in Chiba Prefecture, near Tokyo: Trade friction between China and the U.S. has yet to put a big dent in economic growth, but a drawn out conflict could hurt investment and business sentiment.   © Reuters

TOKYO -- Despite the many uncertainties, the global economy is expanding, lifted by big tax cuts in the U.S. and Asian investment in labor-saving equipment.

The boost to U.S. consumption from lower taxes is apparent in the sales of jeweler Tiffany, whose same-store sales jumped 9% on the year in the February-April quarter. Tax cuts and the higher spending will add 0.7 percentage point to U.S. real gross domestic product this year, according to a forecast by the Japan Research Institute.

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