When National Cycles Coincide: Tracking Global Recessions and Recoveries

  • 2009 recession the most devastating since 1960, says multimedia book
  • Understanding global business cycles necessary to mitigate negative effects
  • Policies need to inspire confidence, not be a source of uncertainty
  • “The bottom line is that a global recession hits everybody at the same time. That is why in the current fragile growth environment, it is especially critical for policymakers to understand where we are in the global cycle,” says co-author Ayhan Kose in an interview with IMF Survey.

    A recurring message from the history of global recessions is that these often-devastating downturns are unavoidable features of the global business cycle. Understanding the workings of the global business cycle is essential because policymakers need to prepare for recessions and, by acting together, reduce their social and economic costs, says Kose, Director of the World Bank’s Development Prospects Group, who together with Marco Terrones, Deputy Division Chief at the IMF’s Research Department, wrote the book, “Collapse and Revival: Understanding Global Recessions and Recoveries.”

    Kose: A global recession hits everybody at the same time.

    IMF Survey : National recessions are relatively easy to describe. But how would you define a global recession?

    Kose: We tried to draw a parallel between the definitions of national and global recessions. A global recession refers to a contraction in real world output per capita. At the same time, to have a global recession, this contraction needs to be accompanied by a broad, synchronized decline in various other measures of global economic activity, including global industrial production, trade, capital flows, employment, and energy consumption.

    Global recessions are relatively rare, as the world has experienced only four such events since 1960: in 1975, 1982, 1991, and 2009. Without a doubt, the 2009 recession was the most devastating.

    IMF Survey : Why was the 2009 recession so deep and highly synchronized?

    Kose: Per capita global output shrunk by 1.8 percent in 2009. This is by far the deepest fall compared to the average of -0.7 percent decline of the four episodes. In addition, global trade collapsed, capital flows and industrial production registered significant declines, and 23 million people lost their jobs.

    One of the most salient features of the 2009 recession was the unprecedented synchronization of national recessions: it hit almost all advanced economies and a very large number of...

    To continue reading

    Request your trial

    VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT