MOST PEOPLE, when presented with bad news, tend to play it down. Even professional economic forecasters are not immune to the temptations of hope. In February more than 500m people in China were experiencing some form of lockdown, and covid-19 had spread to Italy. Yet the imf said that in its base-case forecast global gdp growth this year would be only 0.1 percentage points lower than previously expected. By April it had cut its forecast by 6.2 percentage points, to -3%. By June it had sawn off another 1.9 percentage points. Just a week later an informal poll of about 40 imf staff found that two-thirds expected another downward revision in October. By and large, economic forecasters are a sunny bunch. They rarely predict a downturn. Human nature, incentives and political pressure get in the way. Yet rosy forecasts by the imf and the World Bank can have serious consequences. That is especially the case in poor countries today, where covid-19 is ravaging economies, and governments, international organisations and investors are using forecasts to guide their decisions.
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