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In recent years the fund s forecasts have proved over-optimistic
APRIL is the cruellest month, breeding lilacs out of the dead land, and, in
Washington, chirpy forecasts from the IMF that often prove a bit too chirpy. On
April 18th the fund released its semi-annual World Economic Outlook (WEO),
raising its forecast for global growth in 2017 to 3.5%.
Growth forecasts for the emerging world have not changed. The IMF s global
optimism is based instead on hopes of increased growth in the rich world. The
fund takes a rosy view of the American economy, citing both high levels of
consumer confidence and Donald Trump s plans for more government spending. In
Britain the IMF now reckons GDP will grow by 2.0% in 2017, up from earlier
estimates of 1.5% (issued in January) and 1.1% (last October). The IMF has also
raised its forecasts for Japan and the euro area.
Snipers point out that IMF forecasts have been far from perfect. Some glitches
are excusable. In the spring of 1990, it predicted that Kuwait s economy would
grow by 0.8% that year. It actually fell by 26%. The IMF s model did not allow
for an Iraqi invasion. But other errors are less easily explained: between 1990
and 2007, the IMF s spring forecasts underestimated global growth in 13 of the
18 years, in large part because it failed to foresee the spectacular rise of
China.
Since the financial crisis, however, the IMF has had to revise down its
forecasts over time every year since 2010 (see chart). The fund s spring
forecasts for the coming year have turned out to be over-optimistic in the past
three years.
Christine Lagarde, the IMF s boss, recently conceded that economic growth in
the past six years has been disappointing , but held firm in her belief that
the world economy was turning. Hence the positive revision to its global GDP
forecast albeit by just a tenth of a percentage point.
The global economy may still falter for a number of reasons. Ms Lagarde worries
the rich world will suffer self-inflicted wounds from poor policy choices,
notably on trade. Political uncertainty abounds. Just hours before the IMF
released the WEO came the surprising news of an imminent election in Britain.
The known unknowns hardly help, either. Mr Trump s fiscal policies, for
example, are far from firm plans Maurice Obstfeld, the IMF s chief economist,
calls them a work in progress .
This article appeared in the Finance and economics section of the print edition
under the headline "Hope springs"