From Chapter 1 of the IMF World Economic Outlook, released today:
The world economy is now entering a major downturn
in the face of the most dangerous shock in mature
financial markets since the 1930s. Against an exceptionally
uncertain background, global growth projections
for 2009 have been marked down to 3 percent,
the slowest pace since 2002, and the outlook is subject
to considerable downside risks. The major advanced
economies are already in or close to recession, and,
although a recovery is projected to take hold progressively
in 2009, the pickup is likely to be unusually
gradual, held back by continued financial market
deleveraging. In this context, elevated rates of headline
inflation should recede quickly, provided oil prices stay
at or below current levels. The emerging and developing
economies are also slowing, in many cases to rates well
below trend, although some still face significant inflation
pressure even with more stable commodity prices.
The immediate policy challenge is to stabilize global
financial markets, while nursing economies through a
global downturn and keeping inflation under control.
Over a longer horizon, policymakers will be looking to
rebuild firm underpinnings for financial intermediation
and will be considering how to reduce procyclical
tendencies in the global economy and strengthen supplydemand
responses in commodity markets.