From Bloomberg

“The worst cannot be ruled out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. “There’s a lot of downside risk.”

Now that the head of IMF has stated quite certainly that the world is in a "depression," does that mean the recovery is in site?  After all, the IMF has not exactly been a beacon of clarity heading into the "depression."

From the IMF's 2007 World Economic Outlook

Notwithstanding the recent bout of financial volatility, the world economy still looks well set for continued robust growth in 2007 and 2008. While the U.S. economy has slowed more than was expected earlier, spillovers have been limited, growth around the world looks well sustained, and inflation risks have moderated. Overall risks to the outlook seem less threatening than six months ago but remain weighted on the downside, with concerns increasing about financial risks. ...

Global growth is expected to moderate to 4.9 percent in 2007 and 2008, some ½ percentage point slower than in 2006. In the United States, growth is expected to come down to 2.2 percent this year, from 3.3 percent in 2006, although the economy should gather some momentum during the course of the year as the drag from the housing sector dissipates [emphasis added].

The IMF's 2008 World Economic Outlook was a little gloomier.

The world economy has entered new and precarious territory. The U.S. economy continues to be mired in the financial problems that first emerged in subprime mortgage lending but which have now spread much more broadly. Strains that were once thought to be limited to part of the housing market are now having
considerable negative effects across the entire economy, with rising defaults, falling collateral, and tighter credit working together to create a powerful and hard-to-defeat financial decelerator. ...

[O]ne of the five largest U.S. investment banks, Bear Stearns, was sold under difficult circumstances—including the presumed imminence of a far-reaching default. Second, and just as headline-grabbing, were the virtually unprecedented steps taken by the Federal Reserve to prevent Bear Stearns’s problems from spreading. These steps have had a definite stabilizing effect, at least for now.

In our view, the continuing deep correction in the U.S. housing market and the unresolved financial sector problems have led the U.S. economy to the verge of recession. In fact, we are now anticipating that the United States will indeed slip into recession—meaning that it will experience two or more quarters of negative growth—during the course of 2008, before starting a moderate recovery at some point during 2009.

The effects on the rest of the world are likely to be significant. We have already reduced our expectations for growth in Europe and much of the emerging world. Our revised global growth forecast is 3.7 percent, down from 4.9 percent in 2007, which represents a pronounced slowdown. However, I would stress that achieving growth even at this level will require that most advanced economies experience only mild slowdowns and that many emerging economies be able to keep their rapid pace of growth largely on track.

Like most economists (and market bloggers - ed.), the IMF seems to be very good at telling us what has already happened, but their clairvoyant abilities leave something to be desired.