Economic forecast is the process of predicting future economic activity. It involves obtaining historical data on one or more variables, and then using statistical methods to determine relationships between them. These models are then used to generate predictions about future outcomes.
The most commonly forecasted variable is Gross Domestic Product (GDP), which measures the monetary value of all finished goods and services produced within an economy’s borders. GDP is often viewed as a key indicator of economic progress because it is the only measure that includes all sectors of the economy in one measurement.
Despite the ongoing economic crisis and financial market volatility, forecasters remain optimistic about prospects for this year and next. In fact, a majority expect global economic conditions to improve over the next six months, according to the Blue Chip Indicators survey of leading U.S. economists, which is published by the Federal Reserve Bank of Philadelphia (SPF).
A slowdown in advanced economies, rising trade barriers, elevated policy uncertainty, and tighter financial conditions weigh on global growth. However, lower commodity prices should bolster the outlook for developing economies. Inflation should fall in most regions, and deficits and debt burdens should constrain fiscal space in some low-income countries, weighing on their ability to promote development.
This forecast assumes that the high tariff rates announced on 2 April by the US and China will not be reinstated, and that the suspension agreed on 12 May includes carve-outs and exemptions for key products. In addition, it assumes that the US-China trade deal will lead to a more rapid decline in tariff rates compared with those on the cut-off date of this forecast.
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