hw economy recession affect the world

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
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]
Overview
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]
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