Structural reform is necessary but will be painful in the short term. While attention has been (understandably) fixed on developments in the United States, the biggest threat to the world economy in terms of the drag on aggregate economic activity may well be Japan. How things will play out there remains extremely uncertain.
But overall, barring a sudden and major further intensification of contractionary forces in Japan, there are reasons to think that global economic activity will begin to improve this year. A pretty strong policy stimulus has been applied, led by the United States, in a timely fashion. Global short-term interest rates are unusually low.