Parsing the Global Recession

We all know what a recession is: two consecutive quarters of negative growth. Easy. So a global recession, that’s the same thing, but on a global level, right? Actually, no. Recessions happen, in all countries, but they don’t happen in all countries simultaneously, and it’s pretty much impossible for the entire world to register negative growth in any given quarter.

So don’t be too alarmed when the likes of Andrew Leonard say things like this (italics his):

Today, the International Monetary Fund conceded that there is now a 1-in-4 chance of a global recession occurring in the next 12 months.

The problem here is that he’s not defining his terms. And if you look at the actual document, you’ll see that the IMF’s definition of a "global recession" is global growth of 3% or less. Which suddenly seems much less scary. After all, with the population of the world at 6.6 billion and growing at 77 million per year, that’s a population growth rate of about 1.2%, and 3% growth globally corresponds to significantly positive growth not only on a nominal basis but also on a per capita basis. You can call it a recession if you like, but it’s not really the same animal as what we’re talking about here in the US.

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