Industrial production is ramping up in the US, Europe and Japan. Until recently, restocking depleted inventories was the driving force behind this recovery.

But there are signs that US demand is on the rise, and income growth has picked up as well. If these trends continue to gain momentum, industrial production will strengthen even further in key developed economies. Global industrial production has jumped roughly 7 percent since it troughed in March 2009; even if this growth tails off slightly, this continued improvement would be a big positive for the stock market.

At the same time, Chinese authorities are seeking to cool the nation’s red-hot economy; China’s industrial production likely will grow 15 to 20 percent this year, as opposed to the 30 percent growth posted in the recent past. These moves should extend the recovery cycle; sustainable growth rates are essential to the global economy’s health.

And strength in the world’s developed economies bodes well for China’ exports. Prices for coking coal in Europe are also on the rise, suggesting that steel prices could follow. Such a development would be a huge positive for the global economy, as investors regard Europe as a source of weakness.

That being said, Germany’s economy has steadily improved, and I expect a weaker euro to boost the country’s exports. Germany remains the most important economy in Europe, and one of the best-run developed economies on the planet. Accordingly, its performance is important to the global economic outlook.

Contrary to popular belief, the US consumer will do more for the global recovery than many expect. I’ve noted on numerous occasions that US consumers are entering a new era–an age when saving is just as important as spending. But borrowing won’t stop completely. Although borrowing likely will grow less than income going forward, it should pick up from current levels. Such a development would inject some life into the credit markets and boost global economic growth. Many investors fail to grasp finer details, as the prevailing negativity regarding developed economies has reached its apogee.

That’s bullish for Asia’s emerging economies; not only do exports remain a big part of Asia’s growth model, but this support would allow the region’s central banks to tighten accommodative monetary policies.

China remains the focal point for many investors, as the nation’s economic health holds important implications for the region and the world economies. Although many commentators expect China’s economy to overheat or collapse this year, I don’t foresee either of these outcomes coming to fruition–the Chinese authorities are doing all the right things to slow the economic growth gradually. That’s in stark contrast to the drastic measures of 2007 that left certain parts of the economy at a complete standstill.

At present, China continues to enjoy robust domestic demand, posting solid automobile sales and benefiting from ongoing construction–though the latter has returned to more acceptable levels. Exports were up 45.7 percent from a year ago in February, while industrial production is up roughly 21 percent from last year’s low base. Retail sales are also on a solid growth path.

Investors remain concerned about rising inflation. China’s consumer price index (CPI) is up 2.7 percent from a year ago, but this is of little concern in an economy that’s growing at an annual rate of roughly 8 percent. Policymakers have already noted that wages should increase roughly 3 percent this year. Food prices have increased in China, but that could be related to the Chinese New Year. Droughts could be another driver behind food prices, an issue that investors should monitor going forward.

Developed economies are the key to global economic growth this year. At this juncture, I think that developed economies may be able to surprise to the upside as comparison levels are low. Stay long.