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.
A French-Algerian man went on trial in France on Monday for burning to death his wife in 2021, a case that shocked the public and sparked heavy criticism of police for failing to take adequate measures to protect her. Mounir Boutaa, now 48, stalked his Algerian-born wife Chahinez Daoud following their separation, and even bought a van he parked outside her house near Bordeaux in southwestern France, which he used to watch her without being detected. On May 4, 2021, he attacked her in the street, shot her in both legs, poured gasoline on her and set her on fire. A neighbor hearing
DEATH CONSTANTLY LOOMING: Decades of detention took a major toll on Iwao Hakamada’s mental health, his lawyers describing him as ‘living in a world of fantasy’ A Japanese man wrongly convicted of murder who was the world’s longest-serving death row inmate has been awarded US$1.44 million in compensation, an official said yesterday. The payout represents ¥12,500 (US$83) for each day of the more than four decades that Iwao Hakamada spent in detention, most of it on death row when each day could have been his last. It is a record for compensation of this kind, Japanese media said. The former boxer, now 89, was exonerated last year of a 1966 quadruple murder after a tireless campaign by his sister and others. The case sparked scrutiny of the justice system in
DITCH TACTICS: Kenyan officers were on their way to rescue Haitian police stuck in a ditch suspected to have been deliberately dug by Haitian gang members A Kenyan policeman deployed in Haiti has gone missing after violent gangs attacked a group of officers on a rescue mission, a UN-backed multinational security mission said in a statement yesterday. The Kenyan officers on Tuesday were on their way to rescue Haitian police stuck in a ditch “suspected to have been deliberately dug by gangs,” the statement said, adding that “specialized teams have been deployed” to search for the missing officer. Local media outlets in Haiti reported that the officer had been killed and videos of a lifeless man clothed in Kenyan uniform were shared on social media. Gang violence has left
US Vice President J.D. Vance on Friday accused Denmark of not having done enough to protect Greenland, when he visited the strategically placed and resource-rich Danish territory coveted by US President Donald Trump. Vance made his comment during a trip to the Pituffik Space Base in northwestern Greenland, a visit viewed by Copenhagen and Nuuk as a provocation. “Our message to Denmark is very simple: You have not done a good job by the people of Greenland,” Vance told a news conference. “You have under-invested in the people of Greenland, and you have under-invested in the security architecture of this