Tinkering with Fund forecasts

The IMF’s latest World Economic Outlook (WEO) has left its global growth forecast for this year unchanged at 3.4% and offered 3.6% for 2018. Downward adjustments for this year from three months ago for India (to 7.2% from 7.6%) and Brazil (to 0.2% from 0.5%) are balanced by improved projections for China (to 6.5% from 6.2%, based upon policy stimulus) and Japan (to 0.8% from 0.6%). This WEO update sees the risks overall to the downside, led by populism and protectionism in advanced economies, and vulnerability to external shocks in developing nations.
We see increasing mistrust of economists and experts generally all around us but should say in the Fund’s defense that the making of macro forecasts just days before the handover to the new administration in Washington is a major challenge.

India is again the fastest growing economy in the projections despite the downward adjustment for the current year due to the draconian currency withdrawal and exchange announced in November.

The WEO now sees output growth in Nigeria in 2017 of 0.8%, compared with 0.6% three months ago, and has pencilled in 2.3% for 2018. The change is based upon higher oil output as a result of improvements to security. The commentary does not acknowledge FGN policy changes such as the expansionary fiscal stance. We see growth of 2.0% this year on the basis of that stance and rising oil production, and the evidence that the non-oil economy had recovered from contraction to being flat y/y by Q3 2016.

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