The year 2019 was the tenth anniversary of the last global recession. Yet 2019 also marked an intensifying speculation about whether another such episode was looming. During 2019, global growth forecasts were repeatedly downgraded as a broad-based slowdown enveloped both advanced economies and EMDEs. Trade tensions between major economies led to unprecedented policy uncertainty and took a heavy toll on global industrial production and trade. 

In light of the resurgence of interest on the topic, this paper analyzes the main features of global recessions and the ensuing global recoveries and expansions.  

What happens during global recessions and recoveries? Both statistical and judgmental methods identify four global recessions since 1950: in 1975, 1982, 1991, and 2009. During these four years, there was a contraction in annual real per capita global GDP and broadbased weakness in the main indicators of global activity. Quarterly data yield similar recession dates and confirm that the duration of a typical global recession is about one year – which is also the average duration of national recessions. Global recessions are highly synchronized events, with severe economic and financial disruptions occurring simultaneously in many countries around the world. Although the four global recessions coincided with recessions in the United States, not every U.S. recession coincided with a global recession: in fact, the United States experienced six additional recessions during 1950-2019. 

The world economy suffered a sizable contraction in per capita output during the four global recessions since 1950: the average decline in per capita output (market exchange rate weighted) was about 1.3 percent, 3.5 percentage points lower than the average annual growth rate (2.2 percent) in the non-recession years during 1950-2019. Financial conditions tended to tighten, business confidence declined, and policy uncertainty increased during the global recessions. The 2009 global recession was by far the deepest and most internationally synchronized among the four: it saw the only outright annual contraction in global output and the largest declines in global trade, capital flows, and industrial production. 

In addition to the four global recessions, the global economy experienced relatively slow growth in 1958, 1998, 2001, and 2012. During these episodes, which we refer to as "global downturns", the global economy registered its lowest growth rates of the past seven decades, except for the years of and around the four global recessions. However, these episodes fall short of qualifying as recessions both because world real GDP per capita did not contract and several activity indicators remained robust. 

Global recoveries have generally been characterized by a broad-based rebound in economic activity and normalization of financial conditions. The average growth rate of global output in the first year (or over the first three years) of recoveries has been close to the longer-term average. Financial conditions often remained loose in the first year of the recovery but then gradually tightened. Among the four episodes, the recovery from the 1975 recession saw the steepest acceleration in growth in its first year. Thanks to large, prompt, and globally coordinated policy support, the recovery following the 2009 recession was the second strongest episode. 

How do global recessions and recoveries vary across different groups of countries? First, per capita output growth declined more in advanced economies than in EMDEs during global recessions, with some EMDE regions consistently faring better than others. The EAP and SAR regions continued expanding in each of the past four global recessions, whereas the other four regions all experienced declines in average per capita output. Second, LICs on average suffered larger declines in growth than the broader group of EMDEs. Third, in all four global recessions, both trade and industrial production registered much larger contractions in advanced economies than in EMDEs. 

The magnitude of the 2009 global recession varied across the country groups. As the epicenter of the financial crisis, advanced economies felt the initial brunt of the recession but also suffered the weakest recovery in terms of output and output per capita compared with previous episodes. In contrast, EMDE output growth remained positive during the 2009 recession, and EMDEs' subsequent recovery was the strongest of the four global recessions examined. LICs also were able to continue growing during the 2009 global recession, whereas their growth plummeted in the previous episodes. 

What happens during global expansions and how does the current global expansion compare with previous ones? The duration of global expansions has varied from six years (following the 1975 recession) to 17 years (following the 1991 recession). The latest global expansion turned 10 years old in 2019. It includes a global downturn in 2012 but also the longest U.S. expansion in history. The latest expansion has registered average per capita growth comparable with previous episodes but it has also seen the weakest growth in global trade and capital flows. 

The current expansion has been the weakest in advanced economies as many of them have struggled to overcome the legacies of the global financial crisis and structural weaknesses in demand. In contrast, it has been the strongest one for EMDEs in terms of per capita output growth. However, EMDEs also experienced a slowdown in growth during the expansion as a result of both external and domestic factors. 

Monetary and fiscal policies often become expansionary leading into global recessions, and typically continue supporting the ensuing global recoveries. In advanced economies, monetary policies remained highly accommodative for almost the whole post-2009 decade, with central banks introducing a wide range of unconventional measures to ease credit conditions. However, after the implementation of large, coordinated, fiscal stimulus programs during 2008-09, fiscal support was withdrawn shortly into the recovery. By contrast, EMDEs have generally employed expansionary fiscal and monetary policies during most of the expansion, apart from some adjustments of monetary policy in response to cyclical conditions and financial stability concerns. 

Short- and long-term global growth forecasts have both been repeatedly downgraded during the latest global expansion. During 2010-19, on average, current-year global growth forecasts have been downgraded from a year earlier in around 52 percent of countries. The long-term forecasts for global GDP growth have also steadily declined, from 3.3 percent in 2008 to 2.5 percent in 2019. These downgrades reflect not just persistently mediocre growth outturns in many countries, but also protracted weakness in the fundamental drivers of growth, including productivity and investment. 

Although there has been significant progress in our understanding of the global business cycle and its phases since the 2009 global recession, there remain a number of research avenues to explore. First, there is clear need to better understand the sources of the subdued growth performance that has been the hallmark of the current global expansion. Second, future work needs to focus on the cross-border spillovers and their interactions with domestic real and financial cycles. Third, global spillovers from national macrofinancial linkages require further scrutiny in light of the strong connections among financial entities in different countries.