ALIGNED ECONOMIC CYCLE OF GLOBAL ECONOMIES

Abstract

Background: The alignment of economic cycles is created naturally, by the gradual harmonization of the economic development of economies that are open and cooperating with each other, which gradually over decades has led to their significant economic interconnection, to the creation of the so-called global economy. Aims: The main aim of this paper is to analyze the impact of individual financial crises on economic cycle alignment as well as the naturally increasing correlation between interacting economies themselves. Methods: We have analysed the impact of individual financial crises on economic cycle coherence as well as the naturally increasing correlation between interacting economies. Sample: We examined the historical evolution of the correlation on ten-year periods from 1961 to 2020. Results: The calculated correlations of the percentage GDP growth of the selected 40 countries with the global percentage GDP growth over the last 61 years have shown that the interconnectedness of major economies has reached an advanced level. Conclusions: The higher the correlation of GDP growth of the selected countries with global GDP growth, the higher the effect of economic booms as well as recessions will be multiplied. Implications: This analysis has so far failed to include the impact of the admittedly extremely short but extremely sudden and fully global recession caused by COVID 19.