Abstract:

In this paper recession magnitudes in European countries, the USA and Japan during the Great Recession were evaluated and compared with the use of the Eurostat’s real GDP data. The strongest recessions occurred in Latvia, Lithuania and Estonia, while Slovakia, Poland, Macedonia and Bulgaria escaped recessions in the examined period. Japan experienced three consecutive recessions with the strongest recession being higher in its magnitude than the recession in the USA and Germany, but still significantly lower than the recession in the Baltics. Even the strongest recession in Latvia was found smaller in its magnitude than the Great Depression 1929-1933 in the USA. Hence, comparisons of the Great Recession to the Great Depression in the literature and media are somewhat exaggerated. Furthermore, it was demonstrated on the cross-section of examined countries that the recession magnitudes positively correlated with the mean GDP growth (at market prices) prior to the Great Recession and this relationship was found statistically significant at 0.01 level.