The revised estimate of US fourth-quarter GDP, released last week, was even more negative than the dreadful figure the government statisticians presented in January.

Analysts' consensus expectations had been lowered over the past month, but the data actually came out below what they had been expecting. And this tendency to underestimate the downswing in economic activity also applies to other countries. In other words, the outcome is generally worse than what was in the forecasts.

The contraction in US gross domestic product was the most severe in several decades, but it wasn't a patch on the truly awful plunge in economic activity in Japan. Unfortunately, Japan is particularly vulnerable in a global recession. Its domestic demand has been perennially weak and its exports are highly cyclical.

Other Asian exporters have also been affected, such as Korea, Taiwan and Singapore.

More importantly, people are carefully watching China to see how it is faring. But initial indications are that it has not been as badly affected because of the wide range of its exports, which includes relatively non-cyclical products for the world market.

The Chinese authorities are expected to announce a further enhancement to their stimulus package soon. Together with the Americans, this puts them at the top of the league of global stimulators. Unlike the Japanese, there is no shilly-shallying. They take quick decisions and make a big splash.

Talking of decisions, it doesn't appear that Geithner, the US Treasury Secretary, has been able to formulate good ones. Naturally, he has been lambasted with criticism for his inept handling of the banking issue. Being a sensitive soul, he has pretty much gone into hiding.

But his job is a breeze compared to that of the Japanese Finance Minister, who is facing hideous economic problems, in addition to an unpopular prime minister and an ineffective ruling political party.

The previous finance minister resigned after he was accused of drinking on the job. Now, who can blame the poor chap for seeking a little relief? Anybody with his job should insist on a plentiful supply of wine and beer.

The US Secretary of State made the obvious choice of visiting Asia first before even thinking about Europe. After a courtesy stopover in Japan, she headed for China, Asia's most powerful country, to discuss issues of mutual interest. The global economic crisis figured large in the discussions and there were the usual bland announcements about cooperation.

It is almost certain that the Chinese brought up the issue of the security of their large holdings of US government bonds. Given the problems faced by the American economy, it is not surprising that they would be worried.

Inevitably, China would like to obtain some political or economic concessions from the United States, and there may have been some hard bargaining.

Getting back to the main issue of global economic prospects, the first quarter is likely to be quite awful. And there is not much hope for the second quarter, either. However, by mid year we should start to see some positive signs from leading indicators. So a turnaround is quite possible in the fourth quarter.

Ahead of that, we should be seeing a deceleration in bad-news stories. To begin with, the actual economic numbers may still be negative, but less so than expected. This may be sufficient to spark a measure of optimism.

Currently, the pessimists are wallowing in maximum gloominess and, to them, every bottle looks half empty. Of course, there are those who are particularly interested in propagating a pessimistic outlook. Among them are hedge fund managers dealing in distressed securities and others who are shorting the stock market. Also, there is a group of uber-pessimists with a ready audience of believers. Difficult times always bring out the world-is-ending crowd.

As we have stated before, in the absence of increased protectionism, the global expenditure multiplier can be quite powerful and is capable of initiating a growth spurt.

In addition, with so much money being printed by central banks and a degree of mending of the banking system taking place, the money and credit multiplier will eventually begin to operate forcefully.

We don't need to be a pessimist to recognise that there is damage to the system in many countries that will take a long time to repair. So this will mean several years of subdued growth for the global economy, compared with the past.

In addition, we should watch out for the longer-term consequences of current excessive and distorting government policies. The unwinding of the excesses will not be easy to handle.

Iraj Pouyandeh is a strategist and senior portfolio manager at LOM Asset Management. He manages the LOM Global Equity Fund. For more information on LOM Asset Management please visit www.lomam.com