China Trade Forecast Could Be Lowered

The Wall Street Journal cites informed sources who say the IMF is not likely to issue a new judgment on the Chinese yuan in the coming version of the WEO because the IMF is changing the way it evaluates currencies and the new method won’t be unveiled publicly until June.

The IMF has been more often wrong than right in its predictions of China’s trade surplus, forecasting 10% of GDP in 2008 as a long-term figure. In fact, the country’s trade surplus in 2011 totaled 2.8% of GDP. While it is tricky to forecast trade account balances in these uncertain economic times, the IMF should be able to do better than being off by a factor of more than three.