It is almost like a slow motion replay of a scene from one of those farcical black and white films starring Laurel and Hardy, that some may remember from their childhood. The two men, in a tunnel, observe the train, whistling and chugging as it comes at them from the other side. They tug at each other's sleeves, gesticulate, accuse each other of inaction, and generally do nothing useful, until the train actually is upon them and splatters them both along the sides of the tunnel.

Observing the world's leaders – and especially those governing the core capitalist nations and the major multilateral economic institutions – confront the ever closer possibility of international economic recession, provides a rather similar scenario. It is now clear beyond dispute that the slowdown in world economic growth is not just likely to be more prolonged than previously projected, but also wider, deeper and with every chance of turning into recession.
 
Thus, forecasts and projection of future growth have been revised downwards almost continuously over the past two years, and the IMF's latest projection follow a similar pattern. It is now predicting 3.2 per cent global growth in this year, a full percentage point lower than earlier forecasts. The United States economy, which was earlier expected to grow at more than 3 per cent over the calendar year, is now expected to increase by only 1.5 per cent or even less. Growth in the European Union is projected by the IMF to be only 2.5 per cent in 2001, while the Japanese economy is expected to expand marginally by 0.6 per cent.
 
The trouble is that even these projections appear to be optimistic in relation to most recent trends, and may well be revised downwards even further as the year progresses. Thus, the US economy grew at an annual rate of only 0.7 per cent over the last quarter, and the Japanese economy actually shrank by 0.8 per cent. Most recent figures from Germany suggest that industrial output started falling in the last quarter, leaving the level of industrial output only 1.1 per cent higher than it was a year earlier. In Britain, manufacturing has slipped into recession by falling for two consecutive quarters and total industrial production fell by 2.2 per cent over the year. Even France, which was performing better hitherto, has shown a drop in retail sales over the past one year.
 
The proximate cause of all this is of course the continuing slowdown in the only major economy which had served as an engine of growth in the recent past – the United States. Over the 1990s, the US was the only major economy that continued to expand at an impressive, even alarming rate. It therefore provided a major market for exports from both other developed and developing countries. The Latin American and East Asian developing countries in particular have been heavily dependent upon exports to the US in the recent past especially.
 
The UN's Project Link, which involves economics researchers from over 60 countries, has forecast global economic growth at 2.4 per cent this year, down from 4 per cent in 2000. It has blamed this deceleration on retrenchment in major developed economies, noting that "the economy of the United States has been at the heart of the current weakness in the global economy."
 
The recently released report of Project Link describes the spreading downturn as "an intended one, at least in its early stage, engineered by policy makers, in the first instance in the United States." The Federal Reserve's aim last year was to "put on the brakes" on the rapidly growing US economy in order to head off inflation. It is suggested that this went on for too long and was too severe, creating a downturn that has now taken on a life of its own. This is why it the downturn, which has lasted more than desired, now appears to be relatively impervious to the series of five interest rate cuts that the US Federal Reserve has already over this year.