A forecast provides a picture of where the economy is going. It is typically based on a variety of inputs, including historical data and assumptions that are used in a model to predict future economic trends and events. Economic forecast models can vary from simple to complex, and can utilize a wide range of methods including regression analysis, econometric modeling, reference class analysis and input-output modeling.
Economic forecasters are often influenced by personal beliefs on how economies and their participants work, which can lead to biases that influence the accuracy of their projections. For example, one economist may believe that business activity is determined by the availability of money and another might be more inclined to think that hefty government spending hurts economic growth.
In this spring economic forecast, we expect US GDP growth to decelerate as the impact of higher tariffs on imported goods weighs on investment and household consumption. In addition, the EU is expected to slow as higher crude oil prices drag on exports and consumer confidence is weakening.
Nevertheless, global economic growth is expected to recover from the slowdown observed last autumn. In the baseline scenario, global headline inflation is projected to decline with advanced economies returning to their core inflation targets sooner than emerging markets and developing economies. But elevated trade barriers are expected to slow global trade, weighing on energy commodity prices. The global outlook is skewed to the downside as risks to growth continue to accumulate.