The expansion of the world economy continues to exceed expectations, largely because last year's tax surcharge has failed to limit growth in the United States to the extent intended. World industrial production, adjusted for the effects of special factors (see below) rose at an annual rate of about 8 per cent between the second quarter of last year and the first quarter of this year, and the momentum is probably sufficient for an increase of at least 4½ per cent in 1969 in the combined national outputs of the industrial countries, although the rate of expansion may slow down considerably before the middle of next year.