To judge from the behaviour of the world's major stock markets over the last few weeks, the global economic crisis is finished. 'Green shoots' of recovery have sprouted all over, and by the end of this year, the economy of the Western world will resume growing.

Oh, and it will rain tonight and break this heat. If we're getting hopeful, why not throw everything into the wish-list?

Yes, there is a good body of evidence that in the major Western economies, a bottom has been reached. Meanwhile, boosted by a large government stimulus programme, the Chinese economy avoided the scenario many had feared, of being dragged down with the rest of the world. By and large, the major Asian economies have held up, and may lead the world economy out of recession.

However, to sing 'Happy Days' may be premature. This recession has been unlike any other since the Great De-pression. So, too, will the recovery be. You have to be pretty old to remember a recession as long, and deep, as this one. So we're into uncharted territory.

Recession over

The US stimulus package was designed to phase in spending, so its effects are just now being felt. This may continue to provide support to the US economy. Meanwhile, house prices in America appear to have stopped plunging (although it is early to call a new trend with any confidence). In Canada, the central bank has gone so far as to declare the recession over.

Nonetheless, unemployment is still rising, and will probably continuing doing so into next year. As households 'deleverage,' they will use stimulus money to pay down debts and increase savings rather than to boost spending. While a bottoming economy will give rise to growth, it is questionable that the recovery will prove strong for more than a quarter or so. Some economists even warn of a possible 'double-dip' recovery, which would see the US economy sinking back into recession next year.

In short, the worst may be past. But beyond that, there is little reason to believe that things will soon return to normal. Indeed, the buzz phrase among economists is 'new normal.' We are entering a new paradigm, and will have to get used to a different world economy.

In this new economy, China - and Asia more broadly - will play an ever more important role. The US may remain sluggish for years to come, during which it will grow ever more dependent upon China to bankroll its public purse. We worry about what the IMF might demand in return for a loan; but the Americans are now getting accustomed to being browbeaten by Chinese bankers over their profligate ways.

US recovery

Nor can we just hope that a rebounding US economy will lift us back out of our own mire. Not only is a US recovery likely to be slow and tepid, but the world economy, which has grown fiercely competitive, will become ever more so as China assumes a more dominant role. If Jamaica is to get on to a path of high growth, it will have to do so by developing new products and improving our competitiveness.

So either way, we face tough choices. All the talk about what the IMF will demand of us misses the point. We have to talk about what we will demand of ourselves, if we are to create the type of dynamic, productive economy needed to deliver long-term development.

A global rebound will come. But all boats will not rise with the next tide; some will disappear under the waves. That is the new world into which we are emerging.

John Rapley is president of the Caribbean Policy Research Institute (CaPRI), an independent think tank affiliated with the UWI, Mona. Feedback may be sent to columns@gleanerjm.com.