How Bad Is Out There? Part II

As a follow up to this earlier post, we learn today from the IMF (WEO, Chapter 1, Box 1.1) that there have been four global recessions in the post-World War II era and this one will probably turn out to be the worst:

To summarize, the 2009 forecasts of economic activity, if realized, would qualify this year as the most severe global recession during the postwar period. Most indicators are expected to register sharper declines than in previous episodes of global recession. In addition to its severity, this global recession also qualifies as the most synchronized, as virtually all the advanced economies and many emerging and developing economies are in recession.

Here are the numbers on the four postwar global recessions (click on figure to enlarge):


Note that in addition to the decline in output per person, there has been a sharp fall in global trade and a large pickup in global unemployment. Also from the WEO we learn why there is still the prospect of a malign deflationary cycle (click on figure to enlarge):


The output gap or excess capacity is quite large across the globe.