Moreover, the solvency of some of the most established financial firms came into question, market volatility surged, and liquidity dried up. In effect, the entire U.S. financial system was put under severe strain. The impact of these events was felt across the global economic and financial systems, and the world economy entered its sharpest downturn since the Great Depression of the 1930s.
A striking feature of this crisis has been the successive revisions – all in a downward direction – of global growth forecasts. To give an example, one year ago the IMF forecasted that global growth in 2009 would be 3.8 per cent. In October of last year – that is, shortly after the events of Lehman Brothers and A.I.G.