Accessible Version
The Global Recovery: Lessons from the Past, Accessible Data
Figure 1. GDP Recovery after "Severe Recessions"
This figure shows the average path of three groups of past recessions compared with the COVID-19 recession, with the y-axis showing the percent deviation from trend (-20 to 5) and the x-axis showing the number of quarters since the pre-recession peak (0 to 12). In red, severe recessions show a sharp deviation from trend, followed by a continual decline, leaving a gap of roughly 15 percent after 12 quarters. In blue, severe and short recessions show a sharp deviation from trend, followed by a slight recovery, leaving a gap of roughly 5 percent after 12 quarters. In yellow, severe and financial recessions show a sharp deviation from trend, followed by a continued decline that is slightly larger than the severe recessions in red, leaving a gap slightly larger than 15 percent after 12 quarters. In black, the path of the COVID-19 recession is plotted, using the forecast from the IMF World Economic Outlook after quarter 4. The shaded region shows the 25th and 75th percentiles of individual country forecasts, and tightly follows the average line. There is an immediate sharp decline that matches previous severe recessions, followed by a sharp rebound that is slightly larger than the severe and short group. The forecast stays above but close to past severe and short recessions, leaving a gap just above 5 percent after 12 quarters.
Note: The black line shows the current average GDP path for the COVID-19 recession supplemented with the forecast from the IMF's World Economic Outlook. The gray band shows the 25th to 75th percentile of individual countries' current GDP paths and forecasts. Blue, red, and green lines represent the mean GDP path across past recessions. Severe recessions have a drop in GDP of greater than 7 percent over 2 quarters, preceded by positive growth. Short recessions have positive growth in the third quarter. Financial recessions coincide with banking crises defined by Luc Laeven and Fabian Valencia (2020). Trend is the average growth from 2 to 6 years before each recession. Quarterly GDP data covers 56 countries from 1947–2019.
Source: International Monetary Fund World Economic Outlook (April 2021), authors’ calculations.
Figure 2. GDP Paths of "Severe Recessions"
This figure shows the path of previous severe recessions, with the y-axis showing the percent deviation from trend (-50 to 20) and the x-axis showing the number of quarters since the pre-recession peak (0 to 12). There are 22 lines showing each of the previous severe recessions, with similar paths for the first couple quarters (showing a deviation from trend around 10 percent) and then fanning out, exhibiting the great uncertainty during recoveries from severe recessions. Most of the lines (17) are colored in red, marking that they do not recover above trend within the 12 quarters. Only 5 of the lines are colored in blue, highlighting that the do recover above trend within the 12 quarters.
Note: Each line plots the GDP path for each of the 22 "severe recessions" in the sample. Severe recessions have a drop in GDP of greater than 7 percent over 2 quarters, preceded by positive growth. Trend is the average growth from 2 to 6 years before each recession. Quarterly GDP data covers 56 countries from 1947–2019.
Source: Authors’ calculations.
Figure 3. Discretionary Fiscal Response to COVID-19
Percent of 2020 GDP
| Region | Discretionary Fiscal Response | Percent |
|---|---|---|
| AEs | Equity, loands, and guarantees | 11.59 |
| AEs | Additional spending and foregone revenue | 10.46 |
| EMEs | Equity, loands, and guarantees | 4.06 |
| EMEs | Additional spending and foregone revenue | 5.09 |
Note: Data summarize key fiscal measures enacted by 20 advanced economies (AEs) and 15 emerging market economies (EMEs) in response to the COVID-19 recession as of March 17, 2021. Aggregates are a simple average across countries.
Source: International Monetary Fund.
Figure 4. Bankruptcies in Past Recessions
This figure shows the path of bankruptcies during COVID-19, the GFC, and other previous recessions, with the y-axis showing the index of the pre-recession peak (70 to 140) and the x-axis showing the number of quarters since the pre-recession peak (0 to 8). In purple, other (non-GFC) previous recessions show a relatively linear increase over the 8 quarters, with an increase to 120 percent of the pre-recession bankruptcy rate. The yellow line shows the GFC was much more severe, rising all the way to 140 percent by the 3rd quarters, before falling, ending at roughly 110 percent after 8 quarters. The black line shows the COVID-19 recession in stark contrast, as the rate of bankruptcy actually falls during the 4 quarters for which there is data available, reaching almost 70 percent of the pre-recession value.
Note: Data are from 13 countries (11 advanced foreign economies, the United States, and South Africa) from 1990–2020.
Source: International Monetary Fund, CEIC, national authorities.
Figure 5. Household Disposable Income in Past Recessions
This figure shows the path of household disposable income during COVID-19 and other previous recessions, with the y-axis showing the percent deviation from trend (-5 to 1) and the x-axis showing the number of quarters since the pre-recession peak (0 to 8). The purple line shows the experience during past recessions, with a relatively linear drop in household disposable income over the 8 quarters, down to just below -4 percent deviation from trend. In black, the COVID-19 recession has a similar behavior during the first quarter, but then actually starts to grow, surpassing the pre-recession trend by the third quarter, the last for which data is available.
Note: Data are for 19 advanced economies from 1975–2019. Past recessions cover 75 episodes. Trend is the average growth from 2 to 6 years before each recession.
Source: Federal Reserve Bank of Dallas, authors’ calculations. The authors acknowledge use of the dataset described in Mack and Martínez-García (2011).
Figure 6. Labor Productivity in "Severe Recessions"
This figure shows the path of labor productivity during COVID-19 and three groups of previous severe recessions, with the y-axis showing the percent deviation from trend (-10 to 2) and the x-axis showing the number of quarters since the pre-recession peak (0 to 12). In red, previous severe recessions exhibit a linear drop in labor productivity over the first four quarters to roughly -6 percent deviation from trend, before continuing to decline to just above -8 percent deviation from trend by the end of 12 quarters. In yellow, severe and financial recessions follow a similar path, but end up even lower at the end of 12 quarters, at about -9 percent deviation from trend. In blue, severe and short recessions have a very different path, falling originally only to -4 percent deviation from trend, bottoming out, and then recovering to just below -3% by the end of 12 quarters. The COVID-19 recession, in black, has a sever drop in just the first 2 quarters to -8 percent deviation from trend, but followed by a sharp rebound in the third quarter to above -4 percent deviation from trend. This brings it back to the path of previous severe and short recessions, and the trajectory looks even more optimistic.
Note: Observations for past recessions are severe (17), severe and short (7), and severe and financial (10). Severe recessions have a drop in GDP of greater than 7 percent over 2 quarters, preceded by positive growth. Short recessions have positive growth in the third quarter. Financial recessions coincide with banking crises defined by Luc Laeven and Fabian Valencia (2020). Trend is the average growth from 2 to 6 years before each recession. Data are for 53 economies for previous recessions and 17 economies for the COVID-19 recession.
Source: The Conference Board, Organization for Economic Co-operation and Development Economic Outlook, authors’ calculations.