Showing posts with label kenya. Show all posts
Showing posts with label kenya. Show all posts

Wednesday, April 26, 2017

IMF 2017 Spring Meetings: where we are now

We attended the IMF/World Bank Spring Meetings and heard nothing that would make us revise our 2017 Economic Forecast for Businesses under Trump as noted in my talk to the Greater Houston Black Chamber of Commerce on February 14, 2017.
As I noted then, we expect economic growth to continue for most of 2017. The IMF confirmed our forecast: global economic growth is projected to rise from 3.1% in 2016 to 3.5% by the end of 2017. The IMF expects global economic growth to reach 3.6% by 2018. Total global investments are expected to continue to grow from today's $212 trillion. These are stunningly good figures, and mark a complete reversal from the Fund's earlier, pre-Brexit 2016 economic forecast. Recall that the IMF predicted economic doom and gloom were Britain to exit the EU. They have softened their view, to say the least.
This is not to suggest that the Fund has suddenly become a champion of the rosy scenario. (We think their growth forecast is too optimistic, by the way.) The global economy still faces significant problems and risks:
  • African Famine. At one session the IMF blamed the escalating risk of famine on the Horn and the Sahel regions of Africa on the African nations themselves, a global version of the "blame the victim" strategy used by bank management so effectively to dodge responsibility for the financial crisis, thereby avoiding jail time. The IMF noted that "security shocks" and unmet IMF financial obligations incurred by the subject countries (past due IMF and World Bank loans) prevent the IMF from taking a more active role. They concluded that there is not much they can do to prevent a full blown crisis from occurring sometime later in the year. We suspect they would have a different attitude, no matter how much money they were owed, concerning a potential famine in, say, Europe.
  • Inequality and Taxation. One session noted that economic inequality is not inevitable and that while fiscal (taxation) systems always reduce inequality, they do not always reduce poverty. We agree.
  • The Unbanked. The IMF and the World Bank continue to claim to be concerned about the two billion persons globally who are unbanked, we remind both that banks have not been shown to be the cure for poverty or for inequality. Further, there are at least one hundred thousand unbanked in the DC area alone. One does not have to travel to Kenya to serve the unbanked.
  • Kenya. Speaking of Kenya, one of the most encouraging things I heard was that the Government of Kenya has started selling small amounts of Kenyan Government bonds to the public via cell phone. This is truly brilliant and shows how central banks can actually be inclusive.
As we noted in October, we continue to forecast that we will see a major financial crisis emanating from the World Bank. (For information on timing, scale and scope, and for our full review of the Spring Meeting, email We also continue to believe that the IMF, led by the humbler and more competent Christine Lagarde, as marginally safer, but, still, not without issues.