The IMF forecasts the US economy will rebound this year, Turkey's economy will contract, and Europe will reduce interest rates. The Organization for Economic Cooperation and Development agrees.
Should you follow the predictions of the two government-backed international organizations and bet on NASDAQ stocks and against the Turkish lira? Not according to a number of studies -- including two by the IMF itself. The studies found that the IMF's and OECD's ability to forecast is no better than an average of private economists' projections -- and may be worse.
The IMF's World Economic Outlook, published last week, makes headlines from Sao Paulo to Moscow, largely on the strength of the lender's access to data from finance ministers and central bankers worldwide. The OECD, which published its outlook yesterday, has the same channels of information.
Those official links don't mean the predictions are right, said one critic.
"These numbers get vested with all kinds of importance they don't deserve," said Roy Batchelor, a British researcher who studied the accuracy of IMF and OECD forecasts. "What's more important is the feel the IMF gives the numbers, and the nudges it gives policy-makers." The headlines make IMF miscalculations stand out.
Last September, the IMF said the US economy would expand 3.2 percent this year, prompting the fund's No. 2 official, Stanley Fischer, to say he ``feels much safer'' about the world economy.
Last week, the fund lowered its US prediction by more than half and put world growth at its lowest level since 1998.
In April 1997, the IMF called Thailand, South Korea and Indonesia "strong performers" that would drive developing countries' output to 6.5 percent that year. Three months later, Thailand devalued its currency, triggering a chain reaction throughout East Asia and eventually sending the region plunging into recession.
And while the IMF report last week predicted strong growth in Latin America, the fund itself questioned that optimism.
"Our forecast for South America is a little rich given the problems we've recently seen in Argentina and some of the spillover we've seen to Brazil," IMF Chief Economist Michael Mussa said after releasing the report he supervises.
And even as the IMF came out with a forecast of 4.2 percent for Africa this year, it acknowledged that on average during the past decade it has predicted growth in the poorest continent at one percentage point more than the actual result.
While critics point to the IMF's forecast in September that the US would grow 3.2 percent, the fund counters that it predicted for years that the economic boom in the US would end. And many private economists didn't see the slowdown coming either.
In a 1996 analysis of its forecasts, the IMF said it almost always predicted economic growth in the richest countries to within 1 percentage point each way -- with no evidence of bias for the forecasts.
Yemen’s separatist leader has vowed to keep working for an independent state in the country’s south, in his first social media post since he disappeared earlier this month after his group briefly seized swathes of territory. Aidarous al-Zubaidi’s United Arab Emirates (UAE)-backed Southern Transitional Council (STC) forces last month captured two Yemeni provinces in an offensive that was rolled back by Saudi strikes and Riyadh’s allied forces on the ground. Al-Zubaidi then disappeared after he failed to board a flight to Riyadh for talks earlier this month, with Saudi Arabia accusing him of fleeing to Abu Dhabi, while supporters insisted he was
The Chinese Embassy in Manila yesterday said it has filed a diplomatic protest against a Philippine Coast Guard spokesman over a social media post that included cartoonish images of Chinese President Xi Jinping (習近平). Philippine Coast Guard spokesman Jay Tarriela and an embassy official had been trading barbs since last week over issues concerning the disputed South China Sea. The crucial waterway, which Beijing claims historic rights to despite an international ruling that its assertion has no legal basis, has been the site of repeated clashes between Chinese and Philippine vessels. Tarriela’s Facebook post on Wednesday included a photo of him giving a
Syrian President Ahmed al-Sharaa on Sunday announced a deal with the chief of Kurdish-led forces that includes a ceasefire, after government troops advanced across Kurdish-held areas of the country’s north and east. Syrian Kurdish leader Mazloum Abdi said he had agreed to the deal to avoid a broader war. He made the decision after deadly clashes in the Syrian city of Raqa on Sunday between Kurdish-led forces and local fighters loyal to Damascus, and fighting this month between the Kurds and government forces. The agreement would also see the Kurdish administration and forces integrate into the state after months of stalled negotiations on
‘MOBILIZED’: While protesters countered ICE agents, Minnesota Governor Tim Walz activated the state’s National Guard to ‘support the rights of Minnesotans’ to assemble Hundreds of counterprotesters drowned out a far-right activist’s attempt to hold a small rally in support of US President Donald Trump’s latest immigration crackdown in Minneapolis, Minnesota, on Saturday, as the governor’s office announced that National Guard troops were mobilized and ready to assist law enforcement, although not yet deployed to city streets. There have been protests every day since the US Department of Homeland Security (DHS) ramped up immigration enforcement in the Twin Cities of Minneapolis and Saint Paul by bringing in more than 2,000 federal officers. Conservative influencer Jake Lang organized an anti-Islam, anti-Somali and pro-US Immigration and Customs Enforcement
RSS