In general, however, the declines in both output and prices represent a movement towards a more sustainable position in the long term. Unfortunately the adjustment process is a difficult, if unavoidable, one. International economy There are two fairly distinct sets of events driving developments in the global economy at the moment.
Firstly, there are housing market adjustments in the major economies and the associated difficulties in international financial markets and, secondly, the more recent sharp increases in food and energy prices. As a result, growth in the global economy has slowed while inflation has picked up.