The global economy is beginning to recover from the most severe financial crisis since the Great Depression and the deepest recession since World War II. Global economic activity is starting to pick up, but financial systems remain impaired and domestic and external imbalances persist in many economies. The recovery is expected to be slow, and there are concerns about the prospect of long-term damage to the path of global output, as financial institutions and markets worldwide struggle to restore their ability to intermediate and unemployment rises to high levels. In this context, the aftermath of past financial crises may provide useful insights into the medium-term prospects for economies now in the midst of financial crisis and for the global economy.
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