The Gold Standard | It’s Mostly Futile

Reading this article would make you feel happy that you are not in the shoes of Ms. Lagarde. Reading this article would make you feel happy that you are not a IMF forecaster. The Fund forecasts 4% GDP growth for the world economy this year and next, despite all their much publicised downward revisions and warnings. These forecasts are meaningless but their risk statements are more meaningful. These official institutions cannot forecast a dire scenario as their central case. The Research team would be pilloried if they did so. But, the world paid a heavy price for chasing 4+% growth between 2002 and 2007. The Fund would be doing a yeomen service for world economic stability if it pointed to the trade-offs involved in shooting for such a rate of growth amidst deleveraging, commodity shortages, climate change and political uncertainty in the Middle East. Putting a 4% number as its central forecast, in that sense, is a mockery of the reality.

Their China growth forecast too is excessively optimistic.


DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.