World Library  
Flag as Inappropriate
Email this Article

Global recession

World map showing GDP real growth rates for 2009.
Number of countries having a banking crisis in each year since 1800. This is based on This time is different: Eight centuries of financial folly, which covers only 70 countries. The general upward trend might be attributed to many factors. One of these is a gradual increase in the percent of people who receive money for their labor. The dramatic feature of this graph is the virtual absence of banking crises during the period of the Bretton Woods agreement, 1945 to 1971. This analysis is similar to Figure 10.1 in Reinhart and Rogoff (2009). For more details see the help file for "bankingCrises" in the Ecdat package available from the Comprehensive R Archive Network (CRAN).

A global recession is recession that affects many countries around the world—that is, a period of global economic slowdown or declining economic output.


  • Definitions 1
  • Overview 2
  • See also 3
  • References 4
  • External links 5


The International Monetary Fund defines a global recession as "a decline in annual per‑capita real World GDP (purchasing power parity weighted), backed up by a decline or worsening for one or more of the seven other global macroeconomic indicators: Industrial production, trade, capital flows, oil consumption, unemployment rate, per‑capita investment, and per‑capita consumption".[1][2]

According to this definition, since World War II there were only four global recessions (in 1975, 1982, 1991 and 2009), all of them only lasting a year (although the 1991 recession would have lasted until 1993 if the IMF had used normal exchange rate weighted per‑capita real World GDP rather than the purchasing power parity weighted per‑capita real World GDP).[1][2] The 2009 global recession, also known as the Great Recession, was by far the worst of the four postwar recessions, both in terms of the number of countries affected and the decline in real World GDP per capita.[1][2]

Before April 2009, the IMF argued that a global annual real GDP growth rate of 3.0 percent or less was "equivalent to a global recession".[3][4] By this measure, there were six global recessions since 1970: 1974–75,[5] 1980–83,[5] 1990–93,[6] 1998,[6] 2001–02,[6] and 2008–09.[7]


Informally, a national recession is a period of declining economic output. In a 1974 New York Times article, Julius Shiskin suggested several rules of thumb to identify a recession, which included two successive quarterly declines in gross domestic product (GDP), a measure of the nation's output.[8] This two-quarter metric is now a commonly held definition of a recession. In the United States, the National Bureau of Economic Research (NBER) is regarded as the authority which identifies a recession and which takes into account several measures in addition to GDP growth before making an assessment. In many developed nations (but not the United States), the two-quarter rule is also used for identifying a recession.[9]

Whereas a national recession is identified by two quarters of decline, defining a global recession is more difficult, because a Developing country is expected to have a higher GDP growth than a Developed country.[10] According to the IMF, the real GDP growth of the emerging and developing countries is on an uptrend and that of advanced economies is on a downtrend since late 1980s. The world growth is projected to slow from 5% in 2007 to 3.75% in 2008 and to just over 2% in 2009. Downward revisions in GDP growth vary across regions. Among the most affected are commodity exporters, and countries with acute external financing and liquidity problems. Countries in East Asia (including China) have suffered smaller declines because their financial situations are more robust. They have benefited from falling commodity prices and they have initiated a shift toward macroeconomic policy easing.[10]

The IMF estimates that global recessions occur over a cycle lasting between eight and ten years. During what the IMF terms the past three global recessions of the last three decades, global per capita output growth was zero or negative.[6]

See also


  1. ^ a b c "What’s a Global Recession?". The Walstreet Journal. 22 April 2009. Retrieved 17 September 2013. 
  2. ^ a b c "World Economic Outlook - April 2009: Crisis and Recovery" (PDF). Box 1.1 (page 11-14). IMF. 24 April 2009. Retrieved 17 September 2013. 
  3. ^ "The world economy Bad, or worse". 2008-10-09. Retrieved 2009-04-15. 
  4. ^ Lall, Subir. "IMF Predicts Slower World Growth Amid Serious Market Crisis," International Monetary Fund, April 9, 2008. [1]
  5. ^ a b IMF Jan 2009 update
  6. ^ a b c d "Global Recession Risk Grows as U.S. `Damage' Spreads. Jan 2008". 2008-01-28. Retrieved 2009-04-15. 
  7. ^ "World Economic Outlook (WEO) April 2013: Statistical appendix - Table A1 - Summary of World Output" (PDF). IMF. 16 April 2013. Retrieved 16 April 2013. 
  8. ^ Achuthan, Lakshman (2008-05-06). "The risk of redefining recession, Lakshman Achuthan and Anirvan Banerji, Economic Cycle Research Institute, May 7, 2008". Retrieved 2009-04-15. 
  9. ^ Japan's Economy Shrinks 0.4%, Confirming Recession By Jason Clenfield
  10. ^ a b "IMF World Economic Outlook (WEO) Update - Rapidly Weakening Prospects Call for New Policy Stimulus - November 2008". 2008-11-06. Retrieved 2009-04-15. 

External links

  • The Thirty-Five Most Tumultuous Years in Monetary History: Shocks and Financial Trauma, by Robert Aliber. Presented at the IMF
  • Business Cycle Expansions and Contractions The National Bureau Of Economic Research
  • Independent Analysis of Business Cycle Conditions - American Institute for Economic Research (AIER)
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from World eBook Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.