The managing director of the Inernational Monetary Fund, Christine Lagarde, sees big changes coming to the global economy.
Christine Lagarde's remarks show the damage done to emerging markets by a recent round of "taper talk", over the possibility of the US Federal Reserve slowing the pace of its asset purchases and their vulnerability to future changes in the pattern of global capital flows.
"The immediate priority is to ride out the turbulence as smoothly as possible," said Ms Lagarde. "Currencies should be allowed to depreciate. Liquidity provision can help deal with dysfunctional market behaviour. Looser monetary policy can also help."
But she warned that countries with inflationary pressures - such as Brazil, India, Indonesia and Russia - have less scope to use monetary policy and that high debt and deficits mean many developing countries have little space for fiscal stimulus either.
"Overall, the global outlook remains subdued," said Ms Lagarde, in her traditional speech ahead of the annual World Bank and IMF meetings in Washington next week. "In many of the advanced economies, however, we are finally seeing signs of hope. Growth is looking up, financial stability is returning, and fiscal accounts are looking healthier."
The impact of a slowdown on US Federal Reserve asset purchases had been expected to dominate this year's annual meetings but the Fed's decision to hold off on tapering has removed that focus.
Instead, the world's economic policy makers will have a ringside seat as they assemble in a US capital where much of the federal government is shutdown and a potential default is just days away if Congress cannot resolve its differences. Ms Lagarde said that raising the debt ceiling is "mission critical" for the world economy.
"Because the normalisation of monetary policy affects so many markets and people across the globe, the US has a special responsibility: to implement it in an orderly way, linking it to the pace of recovery and employment; to communicate clearly; and to conduct a dialogue with others," said Ms Lagarde.
Lagarde made it clear that inflation could still imapct much of the developing world, which is a danger as the Fed is expected to "taper" off its bond buying program early next year.
And much of the danger in Europe of sovereign defaults has eased - not so much because of policies put in place but rather because there has been just enough growth to pull countries like Greece and Spain back from tbe brink.
How long it lasts is the question that has yet to be answered.