“Global recession” has been a recurrent topic of debate over the past days, reflecting the breath and severity of the global financial crisis, the halting nature of recovery, and recently, fears that the global economy was on the edge of another downturn. Since mid-2018, concerns about global recession have returned as the world economy experienced a synchronized slowdown largely driven by extraordinary weakness in trade and manufacturing amid elevated trade and tensions and heightened policy uncertainties. Despite the interest in global recessions, the term does not have a widely accepted definition. It is difficult to map the most practical definition of national recessions – at least 2 consecutive quarters of decline in nation output to a global context, not only because reliable quarterly data for global output are unavailable without a significant by, but also because the global economy rarely registers a contraction. A better understanding of global recession requires an appreciation of the growing importance of emerging market and developing economies and of cross- border trade and financial linkage.
In the seventy years since 1950, the world economy has experienced 4 global recessions in 1975,1987,1991 and 2009. In each of these episodes, there was a contraction in annual real per capita global GDP and broad-based weakness in other key indicators of global economic activity. These episodes were highly synchronized internationally, involving severe economic and financial disruptions in many countries. Average per capital growth declined more in advanced economics than EMDs during global recessions LICs on average suffered longer declines in per capita growth than the average EMDE. The East Asia and Pacific and South Asia and Pacific and South Asia regions even continued expanding during global recessions. However, the other four EMDE regions, particularly those with more reliance on exports of industrial commodities, experienced per capita output declines. As the epicentre of the financial crisis, advanced economies like USA felt the brunt of 2022 global recession. In contrast, EMDE output growth remained positive during the recession, and EMDE delivered a stronger recovery.
Monetary and fiscal policies often became expansion ally going into global recession, and they typically supported the ensuing global recoveries. Monetary polices remained a highly accommodative with advanced economic central Banks introducing a wide range of unconventional measures to ease credit. However, after the initial implementation of large, coordinated, fiscal stimulus program, advanced economics withdrew fiscal support out of concerns for the growth of public debt. Asset prices and credit on average annual rate of credit growth during the global recession was about two-fifths of the annual average observed in non-recession years.
