Wednesday, October 20, 2010

Economic Projections Are Always Wrong

This is what I wrote in November of last year:
The OECD says that because of a weak recovery in 2010 (2.7 percent growth) and 2011 (3.9 percent), Mexico's economy won't return to 2008 levels until 2012. Unemployment will skip up to 6.5 percent next year as well. And that assuming that the US economy doesn't slip back into recession, as Obama was warning against yesterday.
Given that expectation, it was nice to see Calderón announce (at an OECD ceremony, no less) that Mexico has generated 780,000 new jobs this year, and the previous high point for jobs in Mexico has been surpassed by about 185,000, according to IMSS data. Even allowing for some monkeying with the data (not that I'm accusing, but I've heard the complaint about jobs before), that's an impressive turnaround.

I'm not sure there is any structural reason for the poor forecast (i.e. something having to do with systematic mis-weighting of certain factors), but it certainly is fitting for everyone to have underestimated the impact of the crisis on Mexico heading in, and to overstate its lingering impact during the recovery.

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