As an economist I have always been wary of our ability to forecast, believing we fall well short even of weather forecasters - perhaps not surprising given that economics is not really a science, although the subjects share one feature - they are both chaotic. It is indeed not easy, and of course we all came under scrutiny following our collective failure to forecast the global financial crisis, Thus I do have sympathy when Michael Gove said in the leadership election that we have had enough of experts!
For me the IMF has always been at the forefront of my criticism. They have been consistently wrong on so many things, in contrast to others including myself on many subjects. Take the UK as one example. They heavily criticised the UK for a policy of fiscal austerity after the global financial crisis, forecasting a recession, based on their analysis of multipliers. In the end we had one of the best performing advanced economies and they had to admit they got it badly wrong. Then they forecast a recession if we voted Brexit. Yet now they are predicting faster growth for the UK than most countries in the eurozone in 2016 and 2017. Similarly the UK Treasury talked about another austerity budget. Talk of this has quite correctly miraculously vanished.
Apart from poor economic analysis, the so blatantly wrong IMF's forecasts are sometimes due to political pressures from governments in the West. Indeed this has just been revealed in a damning internal report on bailout strategy during the eurozone debt crisis.The report said that the IMF repeatedly came under pressure from eurozone governments during the crisis bending its rules to help them. It casts doubt over the fund's rescue strategy for the peripheral eurozone countries including Greece. It also reaffirms the view that the IMF treats advanced countries much more favourably than emerging markets.
Quelle surprise!
No comments:
Post a Comment