I’m in Athens today and I’m going to share with you an important detail about the Operation Peace Spring.
As an invitee of a major discussion platform in Athens, I had the chance to read the “World Economic Outlook Report” released by the IMF two days ago while I was on my way to the meeting.
As you may remember, IMF projected global growth to slow to a negative 2.5 percent in April 2019. According to its latest report, it has been revised down to 0.2%, before returning to 3 percent in 2020. Actually, IMF released forecasts not only on global growth but also on inflation, current account deficit and unemployment.
According to new estimates, 2019 inflation rate forecast has been revised down to 15.7% from 17.5%. This forecast is wrong to begin with. As for the next year, 2020 inflation rate forecast has been revised down to 2020 12.6% from 14.1%. Not completely illogical, but rather a pessimistic prediction I might say.
As for the balance of payments expectations, the ratio of the current account balance to the Gross Domestic Product has been revised down to a negative 0.6 percent from 0.7 percent. If Turkey is to achieve positive GDP growth this year, it would inevitably run current account deficit, even if only slightly. And for 2020, we can observe that the forecast has been revised up to a negative 0.9 percent from a negative 0.4 percent, which is quite natural since the expectation for GDP growth has been revised upwards. This is an analysis proving that the GDP Growth-Current Account Deficit structurality still continues.
It’s only normal for the IMF to revise its unemployment rate estimates upwards considering the quite high jobless rates released two days ago. IMF expects unemployment rate to hit 13.8% in 2019. In line with this forecast, 2020 unemployment rate is likely to climb up to 13.7% from 11.4%.
“IMF has no hope for the world”
IMF has no great expectations for the future of world economy. As the International Monetary Fund has revised global growth rate down to 3 percent from 3.2 percent because of the trade wars, it also lowered its expectation for the next year down to 3.4 percent from 3.5 percent. Accordingly, 2019 GDP growth forecast for developed economies has been revised down to 1.7 percent from 1.9 percent, for developing economies; on the other hand, it has been revised down to 3.9 percent from 4.1percent.
So, who can blame Turkish companies for offering discounts to stay competitive under the circumstances? However, if discount offers do not slow down soon, improvement in current account deficit will not last for long either. I had the impression that some details in the IMF’s report have been drawn up merely on the basis of stored data, without conducting a field survey. After all, you don’t have to be a genius to tell that this is the way how IMF works, especially considering the wrong estimates they released in last April.