IMF Working Papers

The Global Economic Recovery 10 Years After the 2008 Financial Crisis

Author/Editor:

Wenjie Chen ; Mico Mrkaic ; Malhar S Nabar

Publication Date:

April 26, 2019

Electronic Access:

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Summary:

This paper takes stock of the global economic recovery a decade after the 2008 financial crisis. Output losses after the crisis appear to be persistent, irrespective of whether a country suffered a banking crisis in 2007–08. Sluggish investment was a key channel through which these losses registered, accompanied by long-lasting capital and total factor productivity shortfalls relative to precrisis trends. Policy choices preceding the crisis and in its immediate aftermath influenced postcrisis variation in output. Underscoring the importance of macroprudential policies and effective supervision, countries with greater financial vulnerabilities in the precrisis years suffered larger output losses after the crisis. Countries with stronger precrisis fiscal positions and those with more flexible exchange rate regimes experienced smaller losses. Unprecedented and exceptional policy actions taken after the crisis helped mitigate countries’ postcrisis output losses.

Series:

Working Paper No. 2019/083

Subject:

Banking Banking crises Emerging and frontier financial markets Financial crises Financial markets Global financial crisis of 2008-2009 Production Total factor productivity