In April 2016, the IMF’s World Economic Outlook database released their latest data update. In previous posts, we have well documented that FSG’s FrontierData forecasts lead IMF forecasts by 2 – 4 months, meaning that FSG clients gain access to reliable forecasts ahead of those published by publicly available sources. This timing advantage remains true for the most recent data vintage, but there are also key similarities and differences between FSG’s view of our clients’ key markets, and the IMF’s view. The following is a summary of those points.
Our 2016 GDP forecasts are largely aligned with the IMF forecasts in 3 regions: Asia Pacific, Latin America and Western Europe, differing 0.1% or less at the regional level, and < 1% at the individual country level in 97% of countries. While similar, our analysts were forecasting these values months ahead of the IMF’s recent release.
In Central & Eastern Europe, we are consistently more pessimistic than the IMF. Two-thirds of our forecasts are the same or lower than the IMF’s. FSG’s close eye to the impact of global economic developments – such as low oil prices and substantial currency volatility – have given our analysts a lead in identifying growth-reducing local developments, such as de-pegging local currencies. This is particularly evident in Kazakhstan, where we are forecasting negative growth, compared to a positive 0.1% YOY growth rate projected by the IMF.
Middle East & North Africa has the largest discrepancies between the IMF forecasts and our own. In most cases, our forecasts are lower than the IMF’s. For example, our forecasts in both Iran and Iraq are lower by 2+ %, although we are still expecting positive growth in both countries. In Saudi Arabia and Qatar, we are expecting more positive growth, although the discrepancy is fairly small (between 0.5 and 1%). While FSG’s clients have come to expect stable economic growth in the region, particularly from GCC countries, the fall in oil prices and rise in local conflict has destabilized the capacity for local governments to spend, driving FSG’s view of more divergent growth in the medium-term.
Lastly, in Sub-Saharan Africa, we are more optimistic than the IMF. Our forecasts in Congo (DRC) and Ethiopia are notably higher than the IMF forecasts by more than 2.5%. However, our forecasts do vary considerably in this volatile region, with some countries having significantly lower forecasts than the IMF’s (Zimbabwe, for example, is lower by nearly 3%). While the same global economic factors – such as China’s slowing demand for raw materials – that have reduced growth prospects in other regions are true for Sub-Saharan Africa as well, FSG is confident that the structural factors underlying economic growth will bring long-term potential to this region.
FSG will continue to closely monitor all of these markets to ensure our clients have the most up-to-date data available. FrontierData is published at the beginning of every month for all of our subscribers.