Economic forecast is a prediction of how an economy will behave over time, usually with a specific point in time (a quarter or a year). The practice has been around for centuries but the Great Depression of the 1930s brought it into greater prominence, leading to the development of complex models and statistical techniques.
Most of the forecasts of economic activity focus on the concept of output, which can be defined as the monetary value of all finished goods and services produced within a country’s borders. It is also possible to forecast other types of economic activity, such as household consumption, business investment, or government spending.
Forecasts are generally made using mathematical models that rely on the representation of patterns of behavior and assumptions about those representations persisting into the future. Although these models may draw logical substance from general theories of human behavioral phenomena, they are essentially statistical in nature.
This enables the creation of forecast equations that, when solved, can produce accurate estimates of future economic variables. These estimates are then used for a variety of purposes, including planning production capacity and making investments.
Despite an improvement in outlook since January, the global economy is expected to grow at its slowest pace in 17 years, weighed down by new trade barriers and elevated uncertainty. Risks to growth include a re-escalation of armed conflicts and the possibility that global financial conditions will deteriorate.
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