If there is one equivalent to Goldman's FX "strategist" Tom Stolper in the macroeconomic arena when it comes to perpetually inaccurate, flawed and flat out wrong predictions about the future, it is the IMF. Previously we compiled a brief history [10]of their consistently overoptimistic, (downward) revisionistic forecasts based on their semi-annual reports which can only be summarized as "laughable." And, sure enough, we just learned that the IMF is about to trim its unrealistic optimism some more.
From Reuters [11]:
The International Monetary Fund may this week trim its global growth forecast because of the situation in emerging countries, IMF chief Christine Lagarde told a conference on Sunday.
"We had a growth forecast of about 3.3 percent," Lagarde said, referring to the fund's forecast for 2013. "But I fear that considering what we are seeing now in emerging countries in particular - not developing countries and low-income countries but emerging countries - I fear that we might be slightly below that," she told an economists' conference in the southern French city of Aix-en-Provence. The IMF had cut its 2013 forecast for global growth to 3.3 percent in April, down from its January projection of 3.5 percent.
Of course, for the IMF it is always someone's fault, in this case emerging countries being pummeled by the great Chinese deleveraging, that reality intrudes when it is least welcome, and destroys all of its carefully modelled predictions of what an Ivory Towered, Keynesian world should look like.
Visually, it means that what started off as a hockeystick forecast of 4.1% growth in April 2012, will now be cut from 3.3% to 3% of even less.
[12]
Here are some of the other IMF "predictions" that we have mocked in the past, and which are all set to be cut now that the IMF has been forced to admit no (hockey)sticksave is coming.
US: expect the US 2014 forecast growth to tumble in the next several revisions - it only took 12 months for the IMF's 2013 US GDP growth forecast to drop from 2.4% to 1.9%. Obviously, the 2013 to 2014 hockeystick is laughable at best.
[13]
China: so much for the Great Chinese growth miracle:
[14]
Euroarea: over-under on how long until Europe's 2014 growth joins 2012 and 2013 in the negative column?
[15]
Of course, all of these charts are simply a second derivative of credit creation by the sovereign - either public or private, and as such are largely meaningless. The one chart, however, that should be troubling to all is that of global trade growth, or rather, collapse. This is what we said in April [10]:
However, one chart which deserves particular attention not because it is accurate, but because the rate of deterioration is truly troublesome, is the IMF's view on global trade volume of goods and services. It is here that one can clearly see the disastrous impact of global central bank micro-mismanagement, capital misallocation and central planning. In short: global trade is collapsing - even from the point of view of one of the staunchest macro optimists - at a rate unseen since the Great Financial Crisis, and the Great Depression before it.
[16]
It is, or should be, very concerning to the Central Planning brotherhood , that where global trade one short year ago, as per the IMF's April 2012 forecast, was supposed to grow 5.6%, they only see a token 3.6% growth. And the year is not over yet: expect further downward revisions to this key metric as the quarters go by, with the 2014 data point also revised much lower when all is said and done.
Sadly, it is the collapse in global trade that is the most direct testament to the disaster that central planning is: because why trade when one's central bank is there to step in and create the perception of artificial growth, which is not really growth, but merely the dilution of money and the latent onboarding of future runaway inflation. At this pace, quite soon trade growth will halt or even turn negative as countries retrench focused entirely on what their central banks can do for them, instead of engaging in simple economics, comparative advantage and developing their own products and services which should otherwise be competitive on the global arena.
Look for global trade to continue imploding as first currency wars, then trade wars continue to grow stronger and stronger, until in the end, the only variable is who can dilute their currency the most to boost their exports, even as all global trade is ultimately halted thanks to a few not so good Econ PhD's.