An economic forecast is a prediction of the occurrence or the magnitude of an event in an economy, usually expressed in terms of some quantity such as output, consumption, investment, interest rates, or industry employment. Economic forecasts are typically based on statistical models that attempt to represent the underlying economic process as accurately as possible, given available information and assumptions.
The outlook is a downgrade from January projections and reflects the impact of rising trade barriers and higher policy uncertainty. Growth in emerging markets and developing economies is projected to remain below trend as persistent structural frictions prevent the flow of capital, labor, and technology to productive firms. In China, slower domestic demand and deflationary pressures are expected to offset the positive impact of lower tariffs on investment and exports. Meanwhile, a recovery in oil activity in oil exporters and a stabilization of armed conflicts are assumed to lift growth in the Middle East and North Africa region.
Global headline inflation is expected to continue declining in 2022 and 2023 before falling below 2 percent in advanced economies in 2024. In a scenario with greater financial sector stress and higher financial market volatility, global growth is projected to slow down, and headline and core inflation are both likely to fall less rapidly.
A key issue when evaluating competing economic forecasts is their relative quantitative accuracy. However, it is not always easy to measure this accurately, particularly when forecasts involve the simultaneous prediction of several economic variables, for example, a prediction of gross domestic product (GDP), a prediction of interest rates, and a prediction of price inflation.