But there is some good news. The IMF reckons that there is a reasonable prospect that the slowdown will be short-lived, partly because America s Federal Reserve and some other central banks have reacted quickly by cutting interest rates and partly because relatively low inflation in many industrial countries gives policymakers more room for manoeuvre. The IMF s central projection, therefore, assumes some pick-up in economic activity in America during the second half of this year, with consequent beneficial effects around the world. But the important message for economists and policymakers lies in the IMF s emphasis on the degree of uncertainty about the future. Central to this is uncertainty about the outlook for the world s largest economy, America, on whom the prospects for so many other industrial and developing countries heavily depend.
Uncertainty is, of course, particularly acute at turning points in the economy.
As the IMF points out, forecasts of American economic performance have often failed to predict slowdowns and recessions in the past and the current one was no exception. But America is not the only source of concern. The news this week that one of the few Japanese politicians strongly committed to economic reform, Junichiro Koizumi, has become prime minister, is not factored into the IMF assessment. It is also no use looking to Europe to act as the engine of growth although the IMF seems to think it undiplomatic to point this out. European growth this year will probably be what the IMF calls on one page reasonably robust and on another modest .