Home > Uncategorized > EU economists: consistently wrong about Greece

EU economists: consistently wrong about Greece

from Jesse Frederik

Bloomberg shows that the EU assumes that the present loan agreement proposal will lead to a 5% decline of Greek GDP in 2012, down from an initial estimate of -2%. The EU however stays optimistic, as it assumes growth in 2012.

The EU predictions of the Greek economy have however been consistently wrong, again and again erring on the positive side. But this has not been a reason to mitigate optimism. A small selection of recent malpredictions:

Greece: Solid growth driven by domestic demand (2007)

‘Economic growth accelerated to above 4% on an annual basis in the first half of the year […] GDP is projected to grow at around 3,6% over the forecast horizon [in 2008 en 2009 red.]’

Greece: Wider external imbalances in a context of decelerating growth (2008)

‘Economic growth decelerated to just above 3,5% in the first half of 2008. […] In spite of this, economic activity is estimated to continue to grow at well above the euro area average at around 3% in 2008, on the back of resilient private consumption (note: at this time, private consumption had already started its epic decline, M.K.).’

Greece: Economic downturn challenges public finances (2009)

‘Having experienced a decade of strong economic growth of 4% on average, the Greek economy entered a recessionary phase in 2009. [..] The outlook is for real GDP to remain almost flat in 2010, before recovering mildly in 2011.’

Greece: Rebalancing growth amidst ongoing fiscal consolidation (2010)

‘Real GDP is expected to further decline by 3% in 2011 while growth is expected to turn around positively during  the second  half of the year, with the recovery gaining  further momentum in 2012.’

Greece: Painful adjustment (2011)

‘2011 is the fourth consecutive year of declining economic activity […] The progressive rebalancing of the economy as well as growth-enhancing reforms and improving medium-term prospects abroad are expected to move the economy back onto stable footing from 2013 onwards, provided that  the current adverse climate improves.’

  1. Paolo Leon
    February 12, 2012 at 11:54 am

    The question is:why are they consistenly wrong? because they value the sanctity of private property, in this case the lenders’, more than the cost to the economy as a whole and, in particular, to the same lenders,as obviously Greece will not be able to pay anything if its GDP goes down as much as foreseen. This is called methodological individualism, a direct derivation from a pastoral view of the world. Perhaps Morgenthau was right in shaping postwar Germany as a cattle and dfairy land.

  2. February 13, 2012 at 10:47 am

    The main reason seems to be that, for the last 30 years or so, most of them have been indoctrinated (literally) in an ideology posing as «science». One does not have to go as far back as to the analytical ideas of that cursed «prophet» (in certain circles a.k.a. «Saint Karl of Trier»… ). It is sufficient to go back to pragmatist John Maynard Keynes, to have a better understanding of this unfolding historical process.

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