IMF has updated its economic forecast and the report is here. IMF’s previous forecast was in early October and so in just one month it has revised it. Givebn it has release a fresh forecast in such quick time, the obvious case is for a substantial downward revision.
IMF has reviswed its forecasts pretty downwards and is pretty much in line with what Roubini says. UK looks like the worst affected economy and that is why BOE cut rates by 150 bps (though I still don’t see how even zero rate would help).
However, what caught my eye was this IMF officials discussion with the press as per the transcript:
QUESTIONER: I apologize for coming late, so maybe you’ve addressed this. But my understanding is the IMF defines a global recession as less than 2.5 percent. I don’t see the word, recession, as I look through it. Are we saying that the world is in a recession and can you define how the IMF—can you explain how the IMF defines recession?
MR. BLANCHARD: There has been indeed a tradition to refer to growth rates below 3 percent for the world economy as a global recession.
I’ll make the same comment I made at the previous press conference, which is I think that choosing any such number is not useful. I mean it’s very clear that growth in 2009 is going to be very low. If we’re going to use a number, it seems to me zero percent is the only correct number. By that criterion, then we’re basically saying that advanced countries will be in recession in 2009.
QUESTIONER: Can you explain then? Can you explain then why the tradition has been less than 3 percent?
MR. BLANCHARD: I was not here.
QUESTIONER: But does that have to do with population growth?
MR. BLANCHARD: I was not here. I do not find it useful to choose such a number.
QUESTIONER: Maybe Mr. Decressin was here. I think it would be useful to understand the tradition of the IMF.
MR. BLANCHARD: I cannot do it, given that I was not here.
QUESTIONER: Your partner up there who has been here for years and years?
MR. MURRAY: I think, basically, the bottom line is that we’re not defining global recession as something at 3 percent or less.
So, IMF forecasts a global recession figure but doesn’t want to call it so.