World Economy Forecasts and the International Agencies

Abstract

For the last decade the major international agencies have forecast the possibilities for the world economy. This paper reviews these efforts. It finds that the forecasts of the agencies for the economic growth rates of the industrial and developing countries have been systematically biased, while their estimates of the locomotive effect for developing countries have become ambiguous. There has also been a systematic shift in the forecasting methods used by the agencies. In part, this pattern reflects the need to rationalize forecasts within the context of a particular theoretical-ideological perspective, increasingly strengthened by the influence of the present United States administration. Peer group and institutional pressures within the interagency system have resulted in a misplaced consensus about long-term trends, and have undermined the potential benefits of the forecasting exercise. The dangers of biased or unreliable forecasts are evident, given the influence of the forecasts on the planning activities and the style of development of so many developing countries.