Global Chartbook

The seizing of financial markets that followed Lehman Brothers’ failure caused the global economy to fall into its deepest recession in decades. By the spring of 2009 industrial production (IP) in the 30 countries that comprise the Organisation for Economic Cooperation and Development (OECD) had plunged more than 15 percent from year-earlier levels (Figure 1). Incredibly, it could have been far … The seizing of financial markets that followed Lehman Brothers’ failure caused the global economy to fall into its deepest recession in decades. By the spring of 2009 industrial production (IP) in the 30 countries that comprise the Organisation for Economic Cooperation and Development (OECD) had plunged more than 15 percent from year-earlier levels (Figure 1). Incredibly, it could have been far worse. The governments of the world’s major countries averted catastrophe at the height of the crisis by taking steps to prevent a wholesale collapse of their financial systems via recapitalization, loan guarantees and increased deposit insurance. In addition, major central banks slashed policy rates to unprecedented levels, and many implemented programs of “quantitative easing” to provide further stimulus. Governments in most major countries opened the fiscal taps. One year later, there are clear signs that the medicine is having its desired effects as IP in the OECD nations turned slightly positive in December 2009. Unfortunately, however, OECD IP remains 12 percent below its February 2008 peak. At its current rate of increase, IP will not return to its previous peak until mid-2011. Thank you for your interest in Wells Fargo’s Economic Commentary by Email. You are receiving this message because you have requested Economic Commentary information and updates sent via email. If you no longer wish to receive these emails, please click on the following link to access the Economic Commentary by Email registration page: http://www.wachovia.com/economicsemail.