Austerity Was the Answer?

A few days ago the International Monetary Fund (IMF) released their World Economic Outlook. That report release and much of the data itself wasn’t surprising. What was surprising, however, was the fact that the IMF provided data showing that they were wrong about forcing austerity measures on countries.

This is a huge deal as the IMF was one of the driving factors behind the austerity political movement in Europe this year. Having them admit to being wrong about government expenditures could change the entire political landscape- forcing the Germans to back down from many of their demands on Greece, Italy, Portugal and others. The data shown here could help guide these governments to encourage lower austerity measures which would do nothing but give a boost to anyone in business in those countries.

The implications of this report could go even further and impact the United States as Paul Krugman suggests. Krugman’s argument is that the World Economic Outlook data refutes many of the claims being made by the Republican Party in the United States.  The implication of this is that if Republicans were to come to office in the U.S. the U.S. economy may shrink which would send vast ripples throughout the global economy. As this is a sensitive time in the global markets, those ripples will be even larger than normal. The question is if U.S. voters will listen to these results or if they are so upset with the current state of affairs that they will turn a blind eye to this. What does globalEDGE think will be the ultimate outcome of this report?