Economic activity is now slowing with the distinct possibly of the US, the world’s leading economy, sinking into recession in 2008. The slowdown in the US and some other OECD economies is occurring despite continuing robust economic conditions in many other parts of the world. One cause of this moderation is the global credit crunch that has buffeted financial markets and shares worldwide recently. However, this shock has occurred in a period of robust economic performance and this has to some extent softened its impact. Another underlying cause is the cooling of housing markets, which will act to reduce consumers’ wealth and slow down growth in the future. Adding to the downside risks, is the fact that the financial turmoil that began over the 2007 summer has not yet come to an end, with the eventual fallout on the real economy still hard to gauge. At the same time, increases in the prices of oil, food and other commodities have led to a pick-up in headline inflation rates in many countries, reducing purchasing power and consumer demand, the stalwart of growth in many OECD economies.