Chapter 1 Global Prospects and Policies
- International Monetary Fund. Research Dept.
- Published Date:
- April 2009
The global economy is in a severe recession inflicted by a massive financial crisis and an acute loss of confidence. Wide-ranging and often unorthodox policy responses have made some progress in stabilizing financial markets but have not yet restored confidence nor arrested negative feedback between weakening activity and intense financial strains. While the rate of contraction is expected to moderate from the second quarter onward, global activity is projected to decline by 1.3 percent in 2009 as a whole before rising modestly during the course of 2010 (Figure 1.1). This turnaround depends on financial authorities acting decisively to restore financial stability and fiscal and monetary policies in the world’s major economies providing sustained strong support for aggregate demand.