# **Figure 1.1 Investment growth during credit booms and deleveraging episodes**

_In EMDEs, in the median credit boom, investment grew by about 1 percentage point of GDP above its long‐term trend until the credit boom peaked. It dropped below its long‐term trend by 1‐2 percentage points of GDP before deleveraging episodes reached their troughs._

## **A. Investment during credit booms**

## **B. Investment during deleveraging episodes**

<!-- Start of picture text --> Percent of GDP Median Percent of GDP<br>8 Upper and lower quartiles 8 Median Upper and lower quartiles<br>Asian financial crisis<br>6 2012-2015 6<br>4 4<br>2 2<br>0 0<br>-2 -2<br>-4 -4<br>-6 -6<br>-8 -8<br>-3 -2 -1 0 1 2 3 -3 -2 -1 0 1 2 3<br><!-- End of picture text -->

## **C. Consumption during credit booms**

## **D. Consumption during deleveraging episodes**

<!-- Start of picture text --> Percent of GDP Median Percent of GDP<br>6 Upper and lower quartiles 6 Median Upper and lower quartiles<br>2012-2015<br>4 4<br>2 2<br>0 0<br>-2 -2<br>-4 -4<br>-6 -6<br>-3 -2 -1 0 1 2 3 -3 -2 -1 0 1 2 3<br><!-- End of picture text --> Sources: Bank for International Settlements; Haver Analytics; International Financial Statistics, International Monetary Fund; World Development Indicators, World Bank.

Notes. The red lines show sample medians while the blue lines show the corresponding upper and lower quartiles. A credit boom is defined as an episode during which the cyclical component of the nonfinancial private sector credit‐to‐GDP ratio (using a Hodrick‐Prescott filter) is larger than 1.65 times its standard deviation in at least one year. The episode starts when the cyclical component first exceeds one standard deviation and ends in a peak year (“0”) when the nonfinancial private sector credit‐to‐GDP ratio declines in the following year. A deleveraging episode is defined correspondingly. To address the end‐point problem of a Hodrick‐Prescott filter, the dataset is expanded by setting the data for 2016‐18 to be equal to the data in 2015. Sample is for available data over 1980‐2015 for 55 EMDEs. 2015 data are not available for Gabon, Nigeria, Senegal, and Venezuela, RB. Data are not available for Argentina until 1994, Brazil until 1993, China until 1984, Hungary until 1989, Poland until 1992, Russia until 1995, Saudi Arabia until 1993, and Turkey until 1986. Please see the main text of World Bank (2016b) for a detailed description of the sample.

A.B. The cyclical component of investment in percent of GDP (derived by Hodrick‐Prescott filter). The yellow dashed line is the median annual investment growth rate of the six EMDEs (China, Indonesia, Malaysia, Mongolia, the Philippines, and Thailand) that were affected by the 1997 Asian Financial Crisis (year 1997 is set to be t=0). The light blue dashed line for 2012‐15 shows the sample median for the corresponding period.

C.D. The cyclical component of private consumption in percent of GDP (derived by Hodrick‐Prescott filter). The light blue dashed line for 2012‐15 shows the sample median for the corresponding period. 2015 data are not available for Bahrain, Bolivia, Costa Rica, Hungary, India, Jamaica (also for 2000‐01), Kazakhstan, Kuwait, Oman, Panama, Thailand, Tunisia, and data are not available for Zambia and Venezuela, RB (in 2014).

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