Teaching macroeconomics: IMF macroeconomic forecasts, how credible?

The International Monetary Fund’s projections for Gross Domestic Product GDP growth in Argentina since 1999, and in Venezuela since 2003, contain a pattern of large errors that raises serious questions about the objectivity of these estimates. In Argentina, the IMF overestimated GDP growth for 2000, 2001, and 2002 by 2.3, 8.1, and 13.5 percentage points respectively. … The direction of International Monetary Fund IMF forecasting errors was reversed after Argentina’s default on its public debt at the end of2001, and the subsequent collapse of its currency. Then the IMF began underestimating the strength of Argentina’s economic recovery. … the WEO estimates for the four years 2003 through 2006 came in low by 7.8, 5.0, 5.2, and4.3 percentage points respectively. … Argentina has now [2007] completed a five year economic expansion with the fastest growth in the Western Hemisphere, with real GDP adjusted for inflation growth of 47 percent.The IMF has also produced large and persistent underestimates of Venezuela’s economic growth for the last three years, and very possibly the current year. … the IMF projections for the years 2004, 2005, and 2006 underestimated GDP growth by 10.6, 6.8, and 5.8 percentage points respectively.

HT: Kevin Rodriguez.  via Political Forecasting? The IMF’s Flawed Growth Projections for Argentina and Venezuela – imf_forecasting_2007_04.pdf.

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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