The Unassuming Economist

The IMF’s independent evaluation office released its study of IMF Forecasts: Process, Quality, and Country Perspectives. It concludes that “the accuracy of IMF short-term forecasts is comparable to that of private forecasts. Both tend to over predict GDP growth significantly during regional or global recessions, as well as during crises in individual countries.” The study thus confirms the two main findings of my 2001 paper: first, “the record of failure to predict recessions is virtually unblemished,” as I wrote; second, a statistical horse race between private sector and official sector forecasts ends up in a photo finish. My recent work with Hites Ahir looks at the record of professional forecasters in predicting recessions over the period 2008-12, also confirming both findings. The figure shows the close correspondence between Consensus (private sector) and IMF forecasts.