Diversity among Advanced Economies in Rebounding from Crisis

Paolo Mauro (PIIE) and Jan Zilinsky (PIIE)
April 15, 2015 4:30 PM

Newly released projections by the International Monetary Fund (IMF) in its World Economic Outlook highlight the diversity of experiences among advanced economies in rebounding from the crisis. Although most economies (including all economies shown in this blog post) are projected to return to positive growth this year and the next, differences in GDP levels and growth rates since the beginning of the crisis far exceed differences in economic performance observed prior to the crisis. Indeed, whereas the crisis hit most advanced economies forcefully in 2008 and 2009, the patterns of recovery have been strikingly diverse—even within Europe and within the euro area. The following figures document such differences across countries using the IMF's projections released on April 14, 2015. Countries are assigned to groups based on the depth of the initial output loss and the gap between precrisis and post-crisis growth.

All data refer to real GDP, set at 100 in 2007, and are drawn from the World Economic Outlook database from April 14, 2015. The "cumulative output loss during the crisis" is the sum of the gap between 2008 and 2007 GDP, plus the gap between 2009 and 2007 GDP, expressed in percentage points of 2007 GDP. (The sample consists of all advanced economies worldwide as well as emerging economies in Europe that experienced a decline in output in 2008 or 2009. It includes all economies with per capita GDP above US$11,000 in 2007, plus Bulgaria, Romania, and Serbia. Excluded are Cyprus, Luxembourg, Iceland, Mexico, New Zealand, the Slovak Republic, Singapore, Taiwan, small island economies, and large, non-European oil producers.)

Countries were allocated to the following groups:

A) Real GDP level lower in 2009 than in 2007 and projected to be lower in 2016 than in 2009. Croatia, Greece, Italy, Portugal.

B) Cumulative output loss during the crisis smaller than 4 percentage points of GDP, and annual post-crisis real GDP growth (2009–16) more than half the precrisis (2000-2007) rate. Belgium, Canada, France, Norway, Switzerland, United States.

C) Cumulative output loss during the crisis between 4 and 8 percentage points of GDP and annual post-crisis growth more than half the precrisis rate. Austria, Denmark, Germany, Japan, Sweden, United Kingdom.

D) Cumulative output loss during the crisis between 4 and 8 percentage points of GDP and annual post-crisis growth less than half the precrisis rate. Czech Republic, Netherlands, Serbia, Spain.

E) Cumulative output loss during the crisis more than 8 percentage points of GDP and annual post-crisis growth more than half the precrisis rate. Estonia, Hungary, Ireland, Lithuania.

F) Cumulative output loss during the crisis more than 8 percentage points of GDP and annual post-crisis growth less than half the pre-crisis rate. Bulgaria, Finland, Latvia, Romania, Slovenia.

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