By Martin Wolf
As the latest World Economic Outlook from the International Monetary Fund remarks, “the world economy has entered new and precarious territory”. What are perhaps most remarkable are the contrasts between booming commodity prices and credit-market collapses and between buoyant growth in emerging economies and incipient recession in the US. So where are we? How did we get here? And what should we be doing?
The WEO’s answer to the first question is that the US economy may shrink by 0.7 per cent between the fourth quarter of last year and the fourth quarter of 2008. This is a big shift from the 0.9 per cent increase over that period forecast in the January WEO Update. Moreover, growth is expected to be only 1.6 per cent over the following four quarters. Meanwhile, the eurozone’s growth is expected to fall to just 0.9 per cent between the fourth quarter of 2007 and the fourth quarter of 2008.
The remainder of this column can be read here. Debate from our panel of economists appears below.
