Economic forecast is a discipline of making predictions about economic trends and events. In addition to predicting gross domestic product and various measures of interest rates and employment and price inflation, economic forecasts are often used as inputs into policy decisions. As such, a high level of accuracy in economic forecasting has become an important goal of economists and other researchers.
Most forecasting efforts in the field of economics are devoted to real GDP (or national income accounting concepts like GNI) – a measure of the market value of finished goods and services produced within an economy. It is generally reported in chain-weighted form, which ensures that comparisons across time involve real changes in output rather than nominal price changes. Nominal GDP is measured in purchasing power parity (PPP), which translates the value of one unit of currency into the same amount of foreign currency, and a variety of methodologies are available for deflating nominal GDP to obtain real GDP.
The most important economic trends to be predicted are those that will affect the direction of GDP, including global supply and demand for goods and services, global financial conditions, and monetary policy. Many private-sector economists and academics are involved in economic forecasting, but government officials also produce forecasts that play a significant role in shaping fiscal and monetary policies. The success of economic forecasting is judged by the degree to which it anticipates recessions and other financial crises. According to a widely cited statistic, economists have failed to predict 148 of the past 150 recessions.
