Free DP Download 13 February 2020 - GLOBAL RECESSIONS: New evidence

Thursday, February 13, 2020

Marco Terrones, Ayhan Kose and Naotaka Sugawara            
CEPR DP No. 14397 | 09 February 2020

A new CEPR study by Marco Terrones, Ayhan Kose and Naotaka Sugawara sheds new light on the characteristics of global recessions with a focus on the 2009 downturn. Among the findings:  

  • During each of the four global recessions highlighted in this study (1975, 1982, 1991 and 2009), annual real per capita global GDP contracted, and this contraction was accompanied by weakening of other key indicators of global economic activity. 
  • The duration of a typical global recession is about one year – which is also the average duration of national recessions.
  • The global recessions were highly synchronised internationally, with severe economic and financial disruptions in many countries around the world. 
  • Although the four global recessions coincided with recessions in the United States, not every US recession coincided with a global recession: in fact, the United States experienced six additional recessions during the period 1950-2019.
  • The 2009 global recession, set off by the global financial crisis, was by far the deepest and most synchronised of the four recessions. 
  • As the epicentre of the crisis, advanced economies felt the brunt of the recession. 
  • The expansion following the 2009 recession has been the weakest in the post-war period in advanced economies, as many of them have struggled to overcome the legacies of the crisis and structural weaknesses in demand. 
  • In contrast, most emerging market and developing economies weathered the 2009 global recession relatively well and delivered a stronger recovery than after previous global recessions.
  • The long-term forecasts for global GDP growth have steadily declined since the 2009 recession, from 3.3% in 2008 to 2.5% in 2019. These downgrades reflect not just persistently mediocre growth outturns in many countries but also protracted weakness in the fundamental drivers of growth, including productivity and investment.

Figure 13: Global growth forecasts

Sources: Consensus Economics, World Bank. Note: Panel A shows differences in growth forecasts for current years as of December of the year and those made a year ago, in percentage points. The sample includes 85 countries, consisting of 33 advanced economies and 52 EMDEs, weighted by GDP in US dollars. In Panel B, the horizontal axis refers to the year of consensus forecast surveys.

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