The crisis of confidence is the worst since the Second World War. The forecasts for 2009 have been revised repeatedly downwards. The International Monetary Fund now predicts a contraction of 1.6 per cent in output in the United States, 2 per cent in the euro area and 2.6 per cent in Japan.
Recently released GDP data for the last quarter of 2008 and the latest economic indicators presage further downward revisions. The crisis has spread to the emerging economies, which have been affected by the fall-off in global demand and the drying up of net capital inflows. In Europe and in Italy the contraction began in the second quarter.