Economic forecast is the practice of estimating future values of economic variables. The most common economic variable for which to make predictions is gross domestic product (GDP), which measures the monetary value of all finished goods and services produced within a country’s borders. Other important economic series that are often forecasted include interest rates and inflation. There are a variety of methods and models that can be used to forecast these variables, from simple linear models to more complex statistical frameworks. A large recent literature has found that non-linear models can often improve forecasts compared to simpler frameworks. Many studies have also shown that the largest errors in certain time series occur around the start and end of a recession, because such periods tend to break down simple linear relationships.
The world economy is expected to grow at a steady pace of 3.2 percent in 2024 and 2025. That growth rate, however, will be slower than in the previous two years due to rising central bank policy rates as inflation moderates. This will weigh on real GDP and employment growth. In addition, a sharp drop in net migration will weigh on consumer spending.
For a number of reasons, including high levels of debt and interest rates, growth in low-income countries is projected to be weaker than previously anticipated this year and next. As a result, per capita income growth remains insufficient to recover from pandemic losses and reduce extreme poverty.