IMF World Economic Outlook

By: Ian Campbell | Wed, Apr 25, 2012
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Why Read: This commentary links to the International Monetary Fund's 2012 World Economic Outlook. You ought to read the Executive Summary, even if you elect not to scan the entire document or listen to the 45 minute transcript of a related Press Briefing.

The International Monetary Fund has just released its 2012 World Economic Outlook, sub-titled 'Growth Resuming, Dangers Remain'. At a high level, this IMF Outlook suggests:

While I don't disagree with any of the foregoing, these statements largely fall into the 'platitudes' category. Of critical importance, the last point is particularly disconcerting for the following reasons:

After all, why would anyone believe the very politicians and other 'stage players' who have contributed to the current developed country economic malaise and contagion risks are 'ready and able' to reverse course unless forced to do this by external factors that will see them harmed if they don't.

It would be wonderful to have a 'magic wand' that could be waved over the developed countries economies (read America and the Eurozone). Unfortunately, the IMF doesn't have such a 'magic wand', nor does anyone else.

Finally, the IMF concept is fundamentally flawed. The IMF is a 'created agency' that funnels funds from participating countries to 'countries in economic need'. The IMF does not have subsequent control over how that money is spent by the recipients, nor do the countries that donated the money through the IMF - see statement by former IMF President Dominique Strausss-Kahn, who in October, 2012 is quoted as having said:

"We cannot oblige a country to do something, but what we can do is to notice that a country has a commitment and fulfills, or not, a commitment."

Without being negative to Madame Lagarde and her IMF colleagues, who to a person I assume are well intentioned, non-control of contributed funds is a almost certainly a recipe for disaster where those funds are contributed to the every people who 'managed their way' into financial difficulty in the first place.


World Economic Outlook, April 2012
Source: International Monetary Fund, April 2012
Reading time: Executive Summary 8 minutes, entire report, one or more hours



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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