In an ironic case of do DO WHAT I SAY BUT NOT WHAT I DO, the Argentine government on Wednesday slammed the International Monetary Fund for underestimating Argentina’s economic data.
In a three-page statement, the Economy Ministry cast aspersions on the IMF’s competence, saying the multilateral lender has a long history of incompetently measuring and forecasting key statistics like economic growth. The criticism came just hours after the IMF released its World Economic Outlook, which forecasts that Argentina’s economy will shrink by 1.5% this year.
As I reported here, the 195-page Outlook contained a one sentence footnote noting that private sector economists believe the government underestimates certain economic data like inflation. Argentine media have reported widely on apparent efforts by the government to get the IMF to exclude this footnote. But what appears to have most bothered the government, which has long badmouthed the IMF, is the Outlook’s contention that Argentina will have a recession this year.
“Since Argentina abandoned convertibility (in 2002), the IMF has systematically underestimated Argentina’s economic growth rate and the current accounts surplus in our country,” the Ministry said. “Between 2003 and 2008 the IMF underestimated annual GDP by an average of 2.4 percentage points each year.”
What the Economy Ministry didn’t say is that the government itself has underestimated economic growth since 2003. As one savvy observer noted:
“For the same period, the government’s forecasts were lot more inaccurate. The government has been projecting 4% real GDP growth (it is written every year in the government’s budget) and then growth was anywhere between 7% and 9.2%, so the government itself it is “systematically” underestimating the country’s growth by 3 to 5 points. That is worse than the IMF!”