I a March 9 piece entitled “Report Says Economy Will Shrink Worldwide”, The New York Times reports that the World Bank forecasts that for the first time since World War II (basically since the first time they started measuring) the global economy will shrink.
This is a reasonable forecast, but it would probably help to have some context:
- The World Bank only started with the end of World War II, so its forecasts don’t go back very far.
- Prior to 1960 most of the world’s countries weren’t independent yet, so it isn’t clear how accurate measures of global performance were back then.
- The World Bank and other international agencies have had a bad habit of taking the economic estimates of disreputable governments at face value. We have less of those now, which suggests that past forecasts may not have been too good.
- The World Bank also measured (not forecast) that 2003-6 were each the best year ever for the global economy, four years running. As many have pointed out, perhaps we’re unraveling some of those good times – the higher you fly, the harder you fall.