Why Stephen Roach doubts the IMF's optimism

The IMF's latest forecast for global economic growth is the 'single most optimistic' economist Stephen Roach has ever seen. But he has some serious reservations about this rosy scenario.

It was inevitable. Everyone has gone global. And now it's Rosy Scenario's turn that ever-voluptuous step-child of the 1980s who personified the wide-eyed optimism of America's Reagan Administration. In its bi-annual update on the state of the world economy and its prospects, the International Monetary Fund has come up with a baseline view of the world over 2007-08 that would make even Rosy blush.

The latest IMF prognosis is the single most optimistic official forecast I have ever seen for the global economy. After four years of 4.9% average growth in world GDP over the 2003-06 interval, the IMF is projecting two more years of the same average gains of 4.9% over the 2007-08 period. At first, I thought the "num lock" was stuck on the IMF computer. Then I pored through the numbers, read most of the accompanying text, and quickly came to the realization they were dead serious.

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