Having previously admitted its an idiot and a liar over Greece forecasts [4], constantly missed world expectations with a much more rosy picture of hockey-stick-like growth than actually occurs [5], and now Ukraine's insanely optimistic assessments [6]; we thought it only fair to point out that, yet again, Christine Lagarde has been forced to say "we got it wrong [7]." This time the IMF underestimated UK growth - a year after blasting the nation's planners for "playing with fire" by cutting its budget spending. As Bloomberg reports [7], pressed on whether she had apologized to Chancellor of the Exchequer George Osborne, Lagarde stopped short of saying so and said “Do I have to go on my knees?”
As Mises Canada's David Howden notes, [8]
Christine Lagarde admits that the International Monetary Fund “got it wrong” when it chastised the British government’s austerity plans. One year ago the IMF’s chief economist Oliver Blanchard claimed the U.K. was “playing with fire” by cutting its budget.
With the benefit of hindsight, the IMF has changed its stance. The U.K. economy is set to grow 2.9% this year, the fastest among the G7 nations. Furthermore, the growth is being driven by investment spending, not consumption as the IMF had long thought necessary.
Though she stopped short of apologizing for the Fund’s poor recommendations in the past, Lagarde allude to begging for forgiveness. Rather than seeking forgiveness after the IMF makes a mistake, why doesn’t it stop giving out bad advice so that it doesn’t find itself in these embarrassing situations in the future.
We coul dnot agree more...