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IMF’s False Forecasts Exposed as Greece Struggles with Recession & Austerity

A group of IMF technocrats sits down and writes the World Economic Outlook & Fiscal Monitor with the gloomier colours. Global economy looks bad and the IMF forecasts for global growth was marked down to 3.3 percent this year and a still sluggish 3.6 percent in 2013. The IMF revised downward many of its projections when compared to those of last July partly because of greater uncertainty.  

Especially concerning Greece the outlooks are grim, despite the fact that the IMF together with the other two Troika partners the EU and ECB had tailored an austerity costume based on wrong data. Or better say, a costume that does not fit to any economic due to its destructive features. 

Unemployment forecast: 23.3% for 2012 and 25.4% for 2013

Recession forecast: 6% for 2012 and 4% for 2013

 In September 2011 the IMF forecast report for Greece was

recession 5% for 2011 and 2.2% for 2012. Unemployment 18.5% for 2012.

 In real life recession closed at -7% in 2011 and over 20% unemployment.

Real life in 2012 shows unemployment at 23.6% for the second quarter/2012 and recession at -7%.

“Greece will miss the five-year debt reduction target that underpins the country΄s 130 billion euro bailout, according to forecasts released by one of its main lenders on Tuesday.

According to Reuters, the International Monetary Fund in its fiscal monitor report said the debt would fall to 152.8 percent of gross domestic product (GDP) by 2017, compared with a target of 137.3 percent.

 The target was agreed with the IMF and European Union under a debt sustainability scenario that forms the basis for the country΄s 130 billion euro ($168.60 billion) bailout package. 

Under the bailout plan, Greece is due to start generating primary fiscal surpluses of about 4.5 percent of GDP from 2014 onwards to reduce its debt to about 120 percent of GDP in 2020.  
The IMF report, however, shows primary surpluses of that scale only two years later, in 2016.

“In Greece, a deeper-than-expected recession and slippages in the implementation of fiscal measures will once again complicate attainment of the ambitious deficit reduction targets,” the IMF said.” (Reuters via / Full IMF Report Here)

Not a blush, not a sign of regret, not an apology … And they want more austerity of 13 billion euro. Based on false assumptions, forecasts and calculations.

And the joke of the day? Christine Lagarde said “it’s to early to say the Greek program has failed” – Too early, not before the Troika report!

PS I assume, equally wrong are the forecasts for Portugal and Ireland…

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  1. As mentioned in a few other comments, yesterday the IMF published it’s annual report 2012. 60 pages full of very impressive graphs, charts and totally incomprehensible language, making this report accessible for the top elite only. This is not written so that Joe Soap can figure out just how s/he is being screwed.
    On page 43 of this report we find a very curious entry.

    If the multipliers underlying the growth forecasts
    were about 0.5, as this informal evidence suggests, our results indicate that multipliers have actually been in the 0.9 to 1.7 range since the Great Recession. This finding is consistent with research
    suggesting that in today’s environment of substantial economic slack, monetary policy constrained by the zero lower bound, and synchronized fiscal adjustment across numerous economies, multipliers may
    be well above 1. More work on how fiscal multipliers depend on time and economic conditions is warranted.

    What this means in normal language is that the whole basis on which the Troika, including of course the IMF, based their calculations for,to their minds, acceptable levels of screwing Joe Soap on completely wrong parameters. What they are saying is that for every 100€ of spending power they took out an the economy, that economy would shrink by 50€ (the fiscal multiplier of 0.5 they used). Reality now tells them that for every 100€ taken out of an economy, that economy will shrink with between 90€ and 170€ instead. Or, in general, an economy will shrink by more that it loses in purchasing power. It does not take a genius to see that this being the case, that economy is not just grinding to a halt, it is being killed off by the very measures “designed” to kick life back in to it.
    So they decide that more “work” is needed. And while “more work” is needed, there is no change in any policies, and economies keep on shrinking, with the shrinkage increasing exponentially, on a daily basis. In what is officially called “an effort to stabilize the economy”, more money is taken out of it, through further cuts in pensions, wages, etc. Which, according to the IMF’s very own study, will only result in a further and faster shrinking of the economy…

    This study gives the perfect explanation for the “unexpected” continuation of the Greek recession, which is equal to the unexpected continuation of the Portuguese recession and the Irish recession. And soon very elaborate words will be use to tell us that Spain and Italy are up the same shit-creek, not just without a paddle, but in a leaking boat as well.

    Nevertheless, discussion with the Troika on further austerity measures will go ahead tomorrow…
    So much for “bleeding hearts” and “knowing how it feels”. If there ever was overwhelming proof of the whole situation being a deliberate act of economic sabotage of whole nations, this is it.

    • keeptalkinggreece

      wait and accept the unexpected #fatalism

      • Fatalism or worry have never changed the outcome of anything. All they do is create inertia, thus enforcing their negative mindset. It’s a vicious circle leading to depression and worse. And make no mistake, a country, an entire people can also suffer from communal depression. With all the consequences going with it.
        It really is very high time for people in general to take control of their lives back in their own hands. I just read the comment by your other contributor asimenia. My heart goes out to you, asimenia. Just don’t let the bastards get at you. Changing the attitude lies in small things. You describe your business a “failing”. That is fatalism, and it only serves to re-enforce itself. Think of the business as “changing” and you’ll find yourself using your energy looking for solutions rather than wasting it on trying to avoid the failure. I hope you see the difference. It’s a different mindset, and easier said than done (I’ve been there a few times myself, I speak from experience). But it can be done, and you have no idea of the energy it gives if you can change the vantage point.
        Same thing goes for countries and peoples. They to can create their “Eureka” moment, and once that catches, there is really no stopping it. It’s hard work, but worth every bit of sweat it needs. It starts by saying “enough”!

        • Thanks for the comments – I am already trying to find a solution – being foreign means I do not accept things so easily – my Greek husband does. Therefore I am already trying to sort out building an ecommerce shop – thereby freeing up my time to pursue other alternatives. Of course setting up a Greek site as a Brit has major disadvantages – but one can but try!