Over-optimism at the IMF and the World Bank can have serious consequences
Predicting growth, and especially downturns, is fiendishly hard. Getting it right is not helped by forecasters having little incentive to spot clouds on the horizon. Analysts fear that gloom could become self-fulfilling. Standing out from the crowd and wrongly calling a recession damages a forecaster’s reputation more than failing to predict one along with everyone else. Then there is “pushback from governments”, says Maurice Obstfeld, who was the fund’s chief economist in 2015-18.