The tradition of failure of IMF forecasts and the creation of false expectations

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numberswhich broadcasts MFIs they are always wrong, it's a tradition. In his recent outlook on the global economy, he confirmed ex post What the Argentine economy would fall 2.8% this year, a figure that has been virtually confirmed by economic activity datauntil November that the Indec. The agency predicts that the contraction will recur in 2019, but predicts it at 1.7%. Decimals more or less, the product would contract, if everything went well, almost 5 points in two years. But not everything is hell, the Fund estimates a strong recovery of 2.7% in 2020, which would imply the unlikely success of the current recessionary program, in addition to its continuity.

It is important to dwell on this remote prediction of growth. The economy has only one way to break the recessionary path by 2020. For that it would require a change in economic policy and that the government that badumes in December of this year begins a program of expansion of the demandwhich means putting an end to the Fund's recommendations. This also implies, among other badumptions, to move calmly until 2019 to reduce the negative statistical burden that will inherit from 2020. It is clear that such a program only one government of another sign would push itwhich presupposes that the real opposition triumphs in the next elections. The certainty of a triumph of opposition is only probable, but it is a probability that goes beyond the ability to forecast a good economic theory, not just the bad, which the IMF consumes.

The final figures still unsuccessful do not have the ultimate goal of good prediction, but the construction of false expectations.

Ironically, to put it somehow, all of the Fund's forecasts are based on the opposite badumptions. The triumph of the opposition does not appear as a great opportunity to return to growth, but as the main risk. Also as a threat to the adjustment "appetite for reforms", as expressed this week in the Davos forum, as for example flexibilisation of work and reprivatisation of the looted retirement systemsince the government began to be funded at a negative rate with the resources of ANSES, the famous "retired in money".

By slightly rejecting the IMF, it is worth remembering that your predictions about the local economy are not based on your own information, but on those provided by local economists, many of which are the same as those that generate the following data: feed the survey on market expectations (REM) who compiles the central bank, another inexhaustible source of failed forecasts, skewed by the cash flows that go into the accounts, whether they are bankrupt or not, companies that traffic in economic information, better known as "city consultants". The sum of the "distortions" accumulate along the way and are expressed in the final figures always unsuccessful, whose true purpose, that it should be acknowledged, is not the correct forecast, but the construction of false expectations.

At the beginning of 2018, the IMF forecast a growth of 2.5%

Returning to the projections, it is interesting to add a simple exercise, rarely included in the dissemination of the most recent problems, such as recalling the estimates made by the IMF just a year ago. At the beginning of 2018 and for that year, the Fund provided, again for the local economy, 2.5% growth. By 2019, he was even more optimistic, he foresaw an expansion of 2.8%. Of the more than 5 points that would increase during the 2018-2019 fiscal year and the fall of about 5 floors now expected there is a difference of at least 10 points, those who are not only cold numbers, but also the distance that separates the sky from the slow but steady growth, and the hell of the persistent recession.

It may be that the IMF also participates in the creation evoked false expectations, but it should be remembered that in 2017, the international economic press, which expresses the majority opinion of the world's financial strength, already planned for Argentina the problems of placement of new debts that would eventually explode between March and April 2018. The data was a secret to nobody. However, early this year, the IMF, through the pen of the Mexican bank Alejandro Werner, The director of the "Department of the Western Hemisphere" plans for the region an "economic recovery in progress" dictated by nothing less than consumption and investment. For Argentina, it was a little less optimistic, predicting a 2.8 to 2.5 growth reduction due to the fiscal and monetary adjustment plans after the pre-election enlargement of 2017. If "wage containment" were maintained, inflation, which would apparently also be a cost phenomenon, would continue to decline. There was little indication of what would ultimately be expressed as a debt crisis stemming from the worsening of the current account structural deficit. One line: "the reduction of the primary fiscal deficit should help contain the pressures of peso appreciation and deterioration of the current account". Pure Sarasa that reversed the sequence of the problem. It is the current account deficit that has boosted the exchange rate the impossibility of continuing to borrow in foreign currency at the supersonic speed of the first two years. It seems the IMF did not even imagine it.

It is not a question of loading the ink on the formulation of forecasts which always fail because, as it has been said, their objective is not to foresee, but to create expectations. What is involved is to consider the bottom of the credibility that the word organism has. For 2019, and that's what counts today, Werner himself wrote this week that "Inflation and inflation expectations have been dropping since October and all indications are that they will continue to fall slowly in 2019," he said. again the local letter. "This would allow a gradual reduction in the interest rate which, combined with an increase in real wages and exports, would generate a recovery in economic activity from the second quarter of 2019", again fake expectations.

What is remarkable in this writing is Werner's explanation of the failure of his prediction for 2018, a version of "things that happened". "A severe drought," he said, "has dramatically reduced agricultural production and exports, and the sharp depreciation of the peso in mid-2018 has boosted inflation, which has affected disposable income. and investor confidence. " Next, the reduction of voluntary debt flows and capital outflows that were not expected at the beginning of the year, ie these movements in which the IMF is supposed to be an expertthey were not even named for the local chapter. The most important data, the plan imposed by the same body, is attributed to the government: "The government's stabilization plan, based on revised and strengthened monetary and fiscal policies, has helped to alleviate the financial and financial turmoil. stabilize the financial situation of change ". It is true that, after double its price in pesos, the dollar is stable for the moment and for the moment, thanks to the complexity of two factors: the recession and disbursements of the Fund. Word of the IMF.-