Thursday 19 Jul 2018 | 19:34 | SYDNEY
Thursday 19 Jul 2018 | 19:34 | SYDNEY

Charting the Great Recession


Mark Thirlwell

24 April 2009 15:10

In a post  a few days ago I cited some IMF research from the latest World Economic Outlook (WEO) suggesting that the current Great Recession was likely to be long, deep and followed by a slow recovery. Since then, the Fund has released the opening two chapters of the WEO, the first of which contains three sets of charts which paint a useful — if grim — picture of the current crisis.

The first of these tracks world real GDP per capita over the past 50 years, and identifies four periods when world output per head has declined — in 1975, 1982, 1991, and now in 2009. It’s immediately clear from the chart to the left that the current downturn is set to be the deepest recession by far in the past half-century. 

Note that as well as depicting the IMF’s latest forecast for growth in real world GDP per capita in 2009 — a contraction of 2.5% if world output is measured using purchasing power parity weights, and a fall of 3.7% if market rates are used — the chart  reproduced here also incorporates the IMF’s forecast of a modest recovery in 2010 (-0.5% at purchasing power parity weights, but -0.3% at market weights).

The second set of the charts (below left) compares the current recession to its three predecessors across a range of indicators including industrial production, unemployment, trade and capital flows, again emphasising the fact that the Fund thinks this downturn will be much more severe than any other recession in the postwar period. 

Finally, the last chart (below right) emphasises the high degree of synchronicity of the current recession, with the Fund forecasting that nearly all of the world’s advanced economies will be in recession this year.