With the exception of a very few prescient pundits such as the Caribbean’s Avinash Persaud, the financial crisis of late 2007 caught the world by surprise.

What followed was a global economic crisis originating in the US financial system, both soon engulfing the entire world economy. The exception was Asia where the emerging markets continued to experience economic growth, with China continuing its phenomenal and unprecedented high rates of growth. Indeed, China became the main engine of global growth stimulating economic growth in Latin America and Africa by its rapid escalation in demand for commodities.

In recent years, there were some indicators of a nascent resurgence in worldwide economic growth. Hopes for a new buoyance emerged from the euphoria over the drastic drop in the price of oil, portending in the minds of some a new era of cheap energy. Events this year have cast a pall over optimistic scenarios for sustainable economic recovery of the world economy. Even before these deflationary events, the International Monetary Fund had scaled back its forecast for the performance of the global economy.

The projections of GDP growth of the world economy in 2015 were reduced by 0.2 percentage points to 3.3 per cent, taking account of a disappointing first quarter. The prediction for emerging markets has been lowered from 6.0 per cent to 5.6 per cent, reflecting the slowdown in China and its dampening effect on commodity prices. The figure for advanced economies has been revised down from 2.0 per cent to 1.5 per cent. The US is forecast by the IMF to experience a slowdown in economic growth in 2015, from 3.1 per cent to 2.5 per cent. Canada’s outlook is reduced from 2.2 per cent to 1.5 per cent and Britain’s economy will slow down from 2.4 per cent from 2.8 per cent.

These disturbing developments have occurred in the second quarter of 2015. China, because of a combination of long-term structural features and postponed reforms, has been experiencing short instability as reflected in the gyrations in the stock market and a recent devaluation aimed at keeping exports competitively priced. Low import demand for commodities has had a deleterious effect on Latin America, in particular Brazil, whose Standard and Poor’s rating is now down to “junk”. While employment in the US has picked up, the economy is still in a low-growth mode that will require the Federal Reserve to keep interest rates low. Europe has grown at low rates hampered by the debt debacle of Greece and its impending threat to the Euro and indeed to the fiscal guidelines of the European Union integration process. Added to the economic malaise is the enormous and very costly flood of refugees.

The deceleration in growth in a range of economies is now reflecting itself in a sharp slow-down in the rate of expansion of world trade, according to the World Trade Organisation. World trade is forecast to grow at three per cent this year, far below the six per cent growth of the period 1983 to 2008. Global flows of direct foreign investment are also showing worrying signs of sluggishness as investors become cautious over an increasingly uncertain future.

The international community need not be caught off guard as it was in 2007 because there are enough warning signs of a possible global economic crisis to warrant immediate action.