By Zerohedge
The topic of IMF’s comedic forecasts and resulting disastrous policy errors has been discussed extensively, and repeatedly, over the years both elsewhere, and here. And while it does no justice to the human tragedy that ordinary Greeks have had to go through as part of 5 years of failed “bailouts” designed to preserve the wealth of German bankers, Greek oligarchs and a few corrupt politicians, the quarterly World Economic Outlook update affords even the most bankrupt Greeks, not to mention everyone else, an opportunity to laugh at what are now 5+ years of truly hilarious economic forecast hockeysticks, even as the reality continues to deteriorate with every passing year.
Case in point: earlier today the IMF released its latest forecast. In it, 2015 global GDP was cut from 3.5% to 3.3% due to previously unforeseen “risks from Greece to China“. Or rather we should say cut again. Here is the history of the IMF’s 2015 global GDP forecast started with July 2014:
But who cares about constantly being wrong right here, right now (aside from 11 million Greeks that is) when your projections keep promising that growth is always “just around the corner” as they do in the following chart showing just why the IMF has now lost all credibility not only as an bailouter of last resort (see Greece), but as a forecaster.
Presenting: over five years of glorious IMF hockeysticks.
But, believe it or not, that’s not the punchline. The punchline is that according to a Bloomberg analysis, when compared to the seven global central banks, the IMF is the best forecaster of all!
The best forecaster of all: the International Monetary Fund. It beat the Bank of Canada, the winner in the rankings, more often than not on growth and inflation.
The Federal Reserve is the most optimistic. The Bank of Japan made the biggest mistake. The Bank of Canada is the most accurate, but it’s got the easiest job.
“Central banks ought to be much better at what they do,” said Rob Carnell, chief international economist at ING Groep in London. “If they’re trying to convince us all that they know where things are going by using forward guidance you’d think that they know something that we don’t. But unless they’re much better at analyzing the data, we shouldn’t listen to them and they’ve got nothing to say.”
But the IMF doesn’t have a national mandate to set interest rates or deploy other tools, which is a key reason central banks exist and the motive for their forecasts. The projections are cranked into guidance on future policy moves that banks are offering more than ever — guidance that gets used by companies and governments for their own decisions.
Of course, as the charts above show and as Greece has found out first hand, the IMF is actually quite terrible atforecasting anything:
… so if they are the best “official” institution at predicting the future, then the end is surely nigh.
But back to more serious topics, while the IMF never falters in admitting it got the present wrong but will more than make up for it with future enthusiasm, one big concern is that when it comes to that all important global economic variable, trade and commerce, not even the IMF has any optimism left: as of July 2015, the IMF now sees next year’s trade growth rising at the lowest pace since the first great financial crisis: not even the hockey stick effect works here.
Why is global trade important? Because while central banks can print artificial, if record high, stock market prices (unless they are China where they can’t even do that) and force even more record wealth inequality and social conflict, they are completely helpless to “print” trade – trade which is the lifeblood of a globalized economy.
So if anyone is wondering why the world is mired in a global depression which has been masked over the past 7 years with $22 trillion in central bank asset purchases, the chart above should explain it all.
Source: Five Years Of Glorious IMF “Hockey Stick” Comedy | Zero Hedge
