## IMF Survey : When National Cycles Coincide: Tracking Global Recessions and Recoveries

_IMF News, February 9, 2016_

## Source details

**Canonical URL:** [IMF Survey : When National Cycles Coincide: Tracking Global Recessions and Recoveries](https://www.imf.org/en/news/articles/2015/09/28/04/53/soint020916a)

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## Bibliographic details
- Published: February 9, 2016

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### Overview
- The world has experienced four global recessions since 1960: in 1975, 1982, 1991, and 2009.
- The 2009 recession was "the most devastating" since 1960 and marked by unprecedented synchronization across advanced, emerging, and developing economies.
- The multimedia book "Collapse and Revival: Understanding Global Recessions and Recoveries" (authors Ayhan Kose and Marco Terrones) examines these episodes through text, charts, and multimedia interviews.

### Definition and historical frequency
- A global recession is defined as:
  - "a contraction in real world output per capita" 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: four events since 1960 (1975, 1982, 1991, 2009).

### The 2009 recession: scale and synchronization
- Per capita global output shrunk by 1.8 percent in 2009.
- This fall compares to the average of -0.7 percent decline of the four episodes.
- Additional 2009 impacts:
  - Global trade collapsed.
  - Capital flows and industrial production registered significant declines.
  - 23 million people lost their jobs.
- Key characteristic: unprecedented synchronization—"a global recession hits everybody at the same time."

### Lessons learned — core policy takeaways
- Policy space: "the larger the better during global recessions." Countries with sufficient fiscal or monetary room can stimulate activity more effectively.
- Policies for macro-financial stability: "A close monitoring of cycles in financial markets should be an integral part of macroeconomic surveillance and policy design in a highly integrated global economy."
- A balanced growth strategy: support from both domestic and external demand, and a diversified export base, is necessary for the long haul.
- Policy coordination: "essential during global recessions." Strong cross-border trade and financial linkages mean coordinated responses are needed.

### Risks, forecasting, and secular stagnation debate
- Forecasting global recessions: "Are we good at forecasting global recessions? The answer is no."
- Latest forecasts (as of the interview) indicate the global recovery will continue in 2016; "a global recession is not in the cards for this year," but "there are significant downside risks."
- Noted risks:
  - Slowing in a number of emerging markets, including China, which have been slowing since 2010.
  - The collapse in oil prices hitting oil exporters hard.
  - Financial risks from divergence of monetary policies in advanced economies.
  - Rapid accumulation of corporate debt in some emerging markets.
- On secular stagnation:
  - Some advanced economies (Japan and some countries in Europe) may be experiencing prolonged weak growth.
  - The U.S. is described as not in the same group, with "reasonably healthy" growth and significant job creation.
  - Pre-crisis accumulation of private debt led to deleveraging that impeded growth; many advanced economies face structural problems requiring comprehensive reforms.

### Uncertainty and policy communication
- Historical pattern: "an increase in uncertainty in each episode" of global recessions.
- The 2009 recession produced heightened policy uncertainty (fiscal policy, financial sector policies in the United States, and responses to the euro area debt crisis), which adversely affected consumption and investment.
- Recommendation: "Governments and central banks need to clearly articulate their policies to overcome the problem of uncertainty."
- Communication challenges: unconventional monetary tools were necessary but created new communication challenges for central bankers.
- Policy objective: "Policies should ultimately inspire confidence, not be a source of uncertainty themselves."

*IMF Survey interview with Ayhan Kose and Marco Terrones, February 9, 2016.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Survey Interview](https://www.imf.org/en/news/search)
- [See book on IMF eLibrary](http://www.elibrary.imf.org/page/collapse-and-revival-book)
- [Watch the videos](http://www.elibrary.imf.org/page/collapse-and-revival-book?redirect=true)
- [Finance & Development article](http://www.imf.org/external/pubs/ft/fandd/2014/09/kose.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/soint020916a_