IMF downgrades economic outlook

There was a lot of hype last week around the IMF’s release of their latest World Economic Outlook (WEO), in which they downgraded their forecast of GDP growth for the world economy. Entitled “Legacies, Clouds, Uncertainties”, the IMF revised downward their projection for this year to 3.3 percent, 0.4 percentage points lower than in the April WEO while their projection for 2015 was lowered to 3.8 percent. In their April WEO, entitled “Recovery Strengthens, Remains Uneven” the IMF wrote “Global activity has broadly strengthened and is expected to improve further in 2014–15”. The fact that they and other economic forecasters are consistently wrong is not surprising given the dynamic nature of the global economy. However, the fervour around the release of the IMF’s projections that fuels their belief that they are sharing something earth shattering is laughable. Surely with the year almost complete their 2014 forecast is less a “projection”, and actually a survey of what has happened in 2014.