The IMF Explains Why It Keeps Overestimating Growth

In what has become a seasonal ritual, the International Monetary Fund said today that it had been too optimistic about the global growth outlook and revised downward its forecast for 2015. This time, it included a five-page explanation of why it has kept overestimating the strength of the recovery.

Bad guesses on growth in the BRIC countries—Brazil, Russia, India, and China—accounted for about half the error, even though their share of the global economy is only about 28 percent, the IMF said. In addition, “Four stressed economies in the Middle East account for another 20 percent of the global forecast error,” it said. Those four are Egypt, Iran, Iraq, and Libya. In the case of the BRICs, the IMF said it has been gradually revising down not only the countries’ near-term growth, but their long-term growth potential.