Among the four global recessions, the 2009 episode was by far the deepest. It involved the only annual contraction in real global GDP since 1950.<sup>24</sup> The least severe episode in terms of per capita output growth was the 1991 recession. The average annual growth of output over the four global recession episodes was 0.3 percent, about 3.6 percentage points lower than average world growth during expansion years (3.9 percent).

World per capita output, industrial production, trade, and oil consumption often started to slow down two years before the global recessions (Figure 8.A). Moreover, investment, industrial production, and trade typically declined much more than output during the global recessions. While private consumption generally held up relatively well, its growth was much weaker than in non-recession years. Oil consumption declined in every global recession except for the 1991 episode.<sup>25</sup> Depressed financial markets and business confidence. Asset prices and credit on average began decelerating about two years ahead of each global recession (Figure 8.B). The average annual rate of credit growth during the global recessions was about two-fifths of the annual average observed in non-recession years, while both house and equity prices fell, with the decline in the former on average three times larger than the latter. Financial conditions often tightened before the global recessions but then quickly loosened as monetary policy became accommodative. Inflation typically fell during global recessions, which gave further license for central banks to reduce interest rates (Figure 8.C).

The behavior of real interest rates varied widely across the episodes. For example, real rates declined in the 1991 and 2009 episodes, but went up during the 1975 and 1982 recessions. Business confidence fell in all global recession episodes. Economic policy uncertainty increased during the two episodes—1991 and 2009—for which data are available (Caldara et al. 2019; Baker and Bloom 2013).

Differences across country groups. The impact of global recessions has varied across different groups of countries and regions (Table 4). In advanced economies, average per capita growth fell to -1.1 percent during the global recession years, from 2.7 percent during non-recession years. In EMDEs, the decline was to 0.2 percent from 3 percent (LICs on average suffered larger declines in per capita growth than other EMDEs). Thus, the drop in growth was 1 percentage point greater for the advanced economies than for the EMDEs. In addition, both trade and industrial production registered much larger contractions in advanced economies than EMDEs.

Some EMDE regions have been able to weather global recessions better than others. For example, the EAP and SAR regions continued expanding during the past four global recessions whereas the other four regions all on average experienced declines in per capita

> 24 On the basis of the quarterly data, average annual per capita output growth in the four global recessions was -2.4 percent (Table 1). The deepest recession is again seen to be that of 2009 and the least severe that of 1991: average annual growth rates in the four recessions were -1.9 percent (1974:1-1975:1), -0.9 percent (1981:4-1982:4), -0.5 percent (1990:4-1991:1), and -5.4 percent (2008:3-2009:1). Per capita growth was negative in each quarter of the four recessions, except in 1974:2 when growth picked up to 0.8 percent for one quarter only.

> 25 Oil consumption declined in only nine years of the past seventy (i.e., 1974-75, 1980-83, 1993, and 2008-09). These episodes coincided with the global recessions or were within two years before or after them.

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