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Predictability has limits

Predictability has limits

When it comes to drafting economic scenarios, opinion leaders in Germany are currently falling over themselves. According to information from Gunnar Sohn, editor-in-chief of the online news service “Neue Nachrichten”, economists are only modest philosophers when it comes to locating the fate of the economy.

“Having all of us underestimated the speed and drama of the economic crash and stuck to overly optimistic forecasts for too long, this time we don’t want to lag behind reality. If only because the economic institutes of the government, politics and the media were showered with a mixture of disappointment, criticism, reproaches, right up to malice and malicious joy because of their incorrect forecasts,” says Thomas Straubhaar, Director of the Hamburg Institute for World Economics.

Economic researchers would behave like banks in order to find their way out of the wake of incorrect forecasts, which is also not without danger for their own livelihood. “After the latter granted loans too negligently and too recklessly and were mercilessly punished and pilloried for their misconduct in public, they have now become unduly risk-averse and even see more danger in the simple loan financing of common business transactions for perfectly healthy German medium-sized companies as opportunities,” says Straubhaar. Anyone who is very pessimistic now will hardly be beaten if things don’t get that bad.

If it should turn out that there is hardly any solid basis for economic projections, the predictions presented with a great deal of fanfare could be disenchanted as state-sponsored reading of tea leaves. Udo Nadolski, Managing Director of the Düsseldorf IT consulting firm Harvey Nash, therefore points out: “One must not forget that the economic forecasts are not based on hard facts, but are the result of mathematical models.” One percent up or down – more precise According to Ulrich Fritsche, junior professor of economics at the University of Hamburg, economic growth cannot be predicted.