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‘Real World Economic Outlook’ challenges IMF economics

4 September 2003

Every six months the IMF produces the World Economic Outlook (WEO) which presents the Fund’s view on the world economy – its strengths, its weaknesses, its prospects. In the draft report for this year, the Fund took unusual swipes at Anglo-American economic management, accusing the US of drifting and the UK of over-optimistic growth forecasts.

However, for the first time a counter-report has been prepared by Jubilee Research at the New Economics Foundation, a UK-based thinktank. According to Romilly Greenhill of Jubilee Research, “the IMF’s WEO, based on neo-liberal economic thinking, does not tell us what is really going on. By contrast, the Real World Economic Outlook examines the global economy from a radical perspective: that of economic and environmental justice.”

The IMF's WEO, based on neo-liberal economic thinking, does not tell us what is really going on.

The Real World Economic Outlook features views from economists from both North and South, including Joseph Stiglitz, Gita Sen, Jayati Ghosh, Herman Daly, Dani Rodrik and Erinc Yeldan. The theme of the book is debt and deflation. The authors argue that the finance sector is dictating the ‘real’ economy rather than the other way around. The stock of financial assets in the world’s major economies is now at 10 times GDP, and more than 3 times the value of the ‘real’ assets upon which it is supposedly based. This, says Greenhill “is not only leading to financial instability and a looming ‘first world’ debt crisis, but also to massive increases in inequality.”