Going ahead, we are still optimistic about growth..

 

On 6^th February, Mint had an article about the RBI survey of professional forecasters.  The article rightly pointed out that the large range of forecasts 5.8%-7.8% reflected uncertainty in the economy.

The previous survey in September had forecasts in the range of 7-8%.

 

In many instances, however, what seems to have happened is that while the minimum has come down, there are apparently some forecasters out there who are sticking to their guns and not changing their bullish forecasts. In that case, perhaps all that the survey shows is that some forecasters continue to be delusional.

 

Ouch! Ok, Indicus had sent in a forecast of 7.2% in January to the RBI, so were we one the delusional ones? Or were the 5.8% guys delusional? I am afraid Mint meant the former!

Finally, in February, the CSO estimated growth  at 7.1%. Now I wonder, is the CSO being delusional?

Maybe we are all delusional???

 

Now for the November IIP poll, we said 2.9%, CSO put growth at 2.4%

Reuters meanwhile didn’t quote us because we were obviously an outlier. Highest estimate was CRISIL at 1.5%, lowest Kotak Mahindra at –3.0%. Who is delusional here?

 

Net Net…we aren’t gloating,(even though maybe we should!) but the lesson to learn from all this is : forecating is a tough business and in periods of heightened uncertainty, analysts should refrain from being over confident about their forecasts (us included!).

 

Going ahead, we are still one of the most optimistic,..read our newsletter.And of course we could be wrong, but do read others who think like us: Mahesh Vyas of CMIE asks whether we have been too gloomy? Anantha Nageshwaran on ‘its time to bet on decoupling now’, Surjit Bhalla on why GDP and the rupee will do better next year.

Last 5 posts by Sumita Kale

• Walk the talk with Steve Keen - February 26th, 2010
• Elinor Ostrom and Economics - October 13th, 2009
• Garbage - September 10th, 2009
• Energy and risk - August 27th, 2009
• Any defence for the dismal science? - August 19th, 2009

Tags: forecasting, growth

This entry was posted on Thursday, February 12th, 2009 at 11:06 am and is filed under Indian Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.