International economic recession

There is a growing international synchronization of business cycles. The 1974/75 recession was the first general recession since the end of the Second World War which impaired the possibility of effective national anti-cyclical policies based on the internationally unsynchronized nature of national business cycles. Attempts to coordinate economic policies on a world scale, taking into account changed world economic circumstances, have not been able to revive the shaken neo-Keynesian optimism in the possibility of economic policies to prevent capitalist economic crises.

In 1992 OECD economies as a group grew by a mere 1.4% and were expected to grow at only 0.8% in 1993. The modest recovery in the USA compensated for the deceleration of economic activity in Europe and Japan, but unemployment continued to increase, reaching 7.4% in the USA and 10.1% in the EEC/EU in 1992. Output in the EEC/EU grew just over 1% in 1992 and was expected to fall in 1993. Following a drastic drop in investment, output growth in Japan fell from 4.4% in 1991 to 1.3% in 1992, and a mere 1% growth was projected for 1993.

Following the Russian and Asian crisis, the central bank of Brazil raised its benchmark interest rate more than 10 percentage points (from 19% to 29.75%) to stop an outflow of capital that was reaching US$ 1 milliard a day amid concerns that the country's currency will be weakened.