Daniel Moss / Bloomberg:Relax.
The IMF's Forecast Isn't That Bad
Just a little off the top.
The lender nips and tucks its numbers again.
The picture painted is less dramatic than the hand-wringing suggests.
Christine Lagarde is right. There is growth and a recession isn't around the corner.
That the International Monetary Fund chief had to say that is telling. With all the breathless news reporting about cuts to the lender's GDP projections, you might think the sky is falling. Nothing of the kind is happening.
What did the IMF do to warrant all the angst? It nudged its global economic projections lower, though the change is hardly dramatic. The world will expand at 3.5 percent this year and 3.6 percent in 2020, a touch below October's estimate of 3.7 percent for both years.
More an adjustment than a cut. And still not too shabby. That message was crowded out by warnings about trade tensions, Brexit (of course!), high debt and the need for care in setting interest rates given slackening momentum. Sure, we'd all prefer an upgrade, but as far as downgrades go, this was tolerable.
Lagarde even felt moved to parenthetically remind her audience of this at the World Economic Forum. “Does that mean that a global recession is around the corner? No,” she told a news conference. “Yes, there is growth,” she said about a minute later.
It's tough to get the IMF's message just right, mixing tone, narrative and numbers adroitly: While things aren't terrible right now, we would be remiss not to alert you to changes.
The frequency with which the IMF has salami-sliced its numbers every few months contributes to the sense of gloom. The focus goes to the changes, not what's left of the salami loaf. The real portent of the lender moving its forecasts around is the shift in thinking that accompanies it.
That infamous synchronized upswing, fashionable in 2017 and one of the headlines from the IMF's World Economic Outlook in April, doesn't really figure in Monday's estimates. Rather, we're moving toward something resembling the epitaph of lockstep growth: “Overall, the cyclical forces that propelled broad-based global growth since the second half of 2017 may be weakening somewhat faster than we expected in October.''
Perhaps the synchronized story was just too delicious to last. Economic history is about to begin again.
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