New Report Raises Doubts about IMF Growth Projections

Questions of Flawed Analysis, Political Bias in Repeated Large Errors for Argentina, Venezuela

For Immediate Release: April 4, 2007

Contact: Dan Beeton, 202-293-5380 x104

Washington, DC:  On the eve of the IMF/World Bank Spring Meetings, a new paper from the Center for Economic and Policy Research raises serious concerns about IMF projections for Argentina's GDP growth since 1999 and Venezuela's since 2003.

"It's hard to look at the pattern of these large, repeated errors — especially for Argentina — and not wonder what went wrong," said economist Mark Weisbrot, CEPR co-director and co-author of the paper with David Rosnick. 

Weisbrot recommended that the IMF address this problem at their Spring Meetings this month. "It raises questions regarding the reliability and objectivity of the IMF's growth projections," he said.

The report, Political Forecasting? The IMF's Flawed Growth Projections For Argentina and Venezuela, shows that the IMF consistently made large errors in overestimating Argentina's GDP growth for the years 2000, 2001 and 2002. This was during the country's 1998-2002 depression, when the IMF was lending billions of dollars to support policies that ultimately ended in an economic collapse.

These overestimates then changed to large underestimates for the four years 2003-2006, as Argentina's economy grew rapidly. During this time, the IMF had an increasingly antagonistic relationship with the Argentine government and opposed a number of its economic policies. In April 2003, the IMF's Director of Research called Argentina's growth "a hiatus at the moment from its long economic fall."

Argentina has now completed a five-year economic expansion with the fastest growth in the Western Hemisphere, with real GDP growth of 47 percent.

The paper looks at the record of IMF public documents and finds evidence that faulty economic analysis and political considerations may have contributed to these errors. Similarly, the authors suggest that the IMF's repeated large errors in underestimating Venezuela's GDP growth for the years since 2004 may be related to its apparent dislike for that government.