A recently published study of the 469 recessions which have occurred in 194 nations since 1988, showed the International Monetary Fund foresaw only four of them, and none at all in rich nations.
However, the Fund did predict 47 recessions, not one of which eventuated.
Those amusing statistics do not mean the International Money Fund is staffed by idiots. Rather, as I realised over a quarter century back, economic forecasting is both necessary but impossible.
It’s necessary for intelligent planning and impossible because inevitably contingencies arise which no-one could possibly foresee.
My company is not a conventional commercial property owner insofar as we work to a theory I devised in 1993. Theory in fact is somewhat a misnomer as it’s both rational and empirically correct. Without explaining it, the upshot is we make our wealth increments from regular recessions.
Consider this. I bought my first commercial property back in 1962. The cold hard fact is around the end of each decade ever since then, New Zealand has had a recessionary hit, always for reasons no-one could possibly have foreseen. Thus, even if such empirical based reasoning is little better than religious faith, I’ve confidently predicted an economic crisis for this year and we’ve taken significant steps to be in a position to gain from it.
And so it’s come to pass with coronavirus which is having, a huge economic downturn impact worldwide.
As for always wrong economic forecasting, anyone familiar with my novel “OGG,” written 20 years ago, will recall I had a money-making operation in it in which economic forecasting was exploited.
Specifically, the employees studied economic forecasting world-wide, seeking out situations where there was a consensus among economists. They then went in big backing the opposite outcome and were making a fortune.
For some years The Economist periodically wrote of the phenomenon although could never come up with an explanation. And a couple of years back Harvard (I think) established a Chair to study it.
What can be said is the one unquestioned reality about human affairs is to expect the unexpected. You won’t be disappointed.