GLOBAL BUSINESS CYCLE: SYNCHRONIZATION IN THE CURRENT RECESSION

Abstract

In 2008-2009 global economy was grappling with the most severe fi-
nancial shock since the Great Depression. With the global financial system delever-
aging and the U.S. economy in the midst of a severe recession, the global economy
was decelerating quickly after years of heady growth. Despite more integrated trade
and financial linkages around the world, the global business cycle accounts for only
approximately 50%–60% of the variation in real GDP growth across the major de-
veloped and emerging market economies. The remaining economic volatility is a re-
sult of region-specific and country-specific factors. The U.S. economy remains the
primary accelerator of world economic growth, even though the BRIC economies
have clearly emerged as another important engine.