(April 27) – “April is the cruellest month. When the International Monetary Fund (IMF) last pronounced on the world economy, in October last year, its view of the future was rosy,” The Economist is reporting today.

“A gentle, desirable, slowdown in American growth looked likely; European growth, already impressive by recent historical standards, was set to pick up further; and even the Japanese economy seemed finally to be gathering speed.

“The changes made by the Fund in its latest assessment, published on April 26th, are depressing, if not yet alarming. The transformation of global economic prospects in such a short time offers salutary lessons both for forecasters and for policymakers: predicting the future is a risky business, and resting on one’s policy laurels just as unwise.

“Because the IMF’s twice-yearly economic outlook is so detailed and wide-ranging in scope, its findings and policy recommendations are studied intensively. Its basic conclusion, that the world will grow less fast this year than looked likely six months ago (3.2% rather than 4.2%), is hardly a surprise.

“Plenty of people in America and Japan, for instance, are already feeling the impact of a sharp slowdown in growth. In America, this comes as a shock after a decade of unprecedented postwar expansion. In Japan, the economy is once again teetering on the brink of recession after a decade of near-stagnation. Jobs are already being lost as the lay-offs begin; fortunes, large and small, have been wiped out as Wall Street and the world’s stockmarkets have plunged in value.

“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.