Over recent years, the global economy has been hit by large negative demand shocks that
resulted from a sizeable loss of wealth, following sharp declines in house and stock prices
and the tightening of financial conditions associated with the ongoing financial crisis (see
Decressin and Laxton, 2009). The combination of the financial crisis, the downturn in the
global economy and the increase in unemployment also gave rise to a loss of confidence that
intensified the downward pressures on the economy. The downturn was particularly steep in
industrialized economies and in some emerging economies such as those of Eastern Europe.