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Economic forecasting is the process of making predictions about the economy. Forecasts can be carried out at a high level of aggregation—for example for GDP, inflation, unemployment or the fiscal deficit—or at a more disaggregated level, for specific sectors of the economy or even specific firms.
Many institutions engage in forecasting, including international organisations such as the IMF, World Bank and the OECD, national governments and central banks, and private sector entities, be they think tanks, banks or others. Some forecasts are produced annually, but many are updated more frequently.
The Economic Outlook is the OECD’s twice-yearly analysis of the major economic trends and prospects for the next two years. Information on their forecasting methods and analytical tools and sources and methods is available online.
In early 2014 the OECD carried out a self-analysis of its projections in OECD forecasts during and after the financial crisis: a post mortem. "The OECD also found that it was too optimistic for countries that were most open to trade and foreign finance, that had the most tightly regulated markets and weak banking systems" according to the Financial Times.
The World Bank model is available for individuals and organizations to run their own simulations and forecasts using its iSimulate platform.
Consensus Economics Inc and FocusEconomics, among others, compile the macroeconomic forecasts prepared by a variety of forecasters, and publishes them every month. The Economist magazine regularly provides such a snapshot as well, for a narrower range of countries (a recent example is provided here).
There are many studies on the subject of forecast accuracy. Accuracy is one of the main, if not the main criteria, used to judge forecast quality. Some of the references below relate to academic studies of forecast accuracy.
The financial and economic crisis that erupted in 2007—arguably the worst since the Great Depression of the 1930s—was not foreseen by most of the forecasters, even if a few lone analysts had been predicting it for some time (for example, Nouriel Roubini and Robert Shiller). The failure to forecast the "Great Recession" has caused a lot of soul searching in the profession. The Queen of England herself asked why had nobody noticed that the credit crunch was on its way, and a group of economists—experts from business, the City, its regulators, academia, and government—tried to explain in a letter.
List of regularly published surveys based on polling economists on their forecasts
|Organization name||Forecast name||Number of individuals surveyed||Number of countries covered||List of countries/regions covered||Frequency||How far ahead the forecasts are made for||Start date|
|Consensus Economics||Consensus ForecastsTM||over 700||115||Member countries of the G-7 industralized nations, the Eurozone region as well as various economies in Western Europe, the Middle East, Central Asia, Africa, Asia Pacific, Eastern Europe, Latin America and the Nordic countries.||Monthly||12 months to 10 years||1989|
|FocusEconomics||Focus Economics Consensus Forecast||Several hundreds||95||G7 (Major Economies), Asia, Eastern Europe, Euro Area, Latin America & Central America, Nordic economies, Middle East and North Africa (MENA)||Monthly||24 months to 10 years||1998 |
|Blue Chip Publications division of Aspen Publishers||Blue Chip Economic Indicators||50+||1||United States||Monthly||?||1976|
|Federal Reserve Bank of Philadelphia||Survey of Professional Forecasters||a few hundred||1||United States||Quarterly||6 quarters, plus a few more long-range forecasts||1968|
|European Central Bank||ECB Survey of Professional Forecasters||55||?||Euro zone||Quarterly||Two quarters and six quarters from now, plus the current and next two years||1999|
|Federal Reserve Bank of Philadelphia||Livingston Survey||?||1||United States||Bi-annually (June and December every year)||Two bi-annual periods (6 months and 12 months from now), plus some forecasts for two years||1946|
- "Consensus Economics". Consensus Economics. Retrieved April 14, 2014.
- "Consensus Economics (about page)". Consensus Economics. Retrieved April 14, 2014.
- "Data For Institutional Investors". Consensus Economics. Retrieved April 14, 2014.
- "Focus Economics: Economic Forecast Economic Forecasts from the World's Leading Economists". Retrieved December 15, 2014.
- "Why Consensus Forecasts?". FocusEconomics. Retrieved December 15, 2014.
- "About us". Focus Economics. Retrieved December 15, 2014.
- "FocusEconomics: About us". FocusEconomics. Retrieved December 15, 2014.
- Moore, Randell E. "Blue Chip Economic Indicators". Retrieved April 13, 2014.
- "Survey of Professional Forecasters". Federal Reserve Bank of Philadelphia. Retrieved April 13, 2014.
- Croushure, Dean (November–December 1993). "Introducing: The Survey of Professional Forecasters". Business Review.
- "ECB Survey of Professional Forecasters". European Central Bank. Retrieved April 13, 2014.
- Juan Angel Garcia (September 2003). "An Introduction to the ECB's Survey of Professional Forecasters". European Central Bank.
- "Livingston Survey". Federal Reserve Bank of Philadelphia. Retrieved April 17, 2014.
- "The IMF and OECD versus Consensus Forecasts", August 2000. Applied Economics, 33(2), p. 225-235 Roy Batchelor (City University Business School) The IMF and OECD versus Consensus Forecasts
- "Assessment of Consensus Forecasts Accuracy: The Czech National Bank Perspective", Working Paper Series 14, 2010, December 2010 Filip Novotný and Marie Raková (both Czech National Bank) "Assessment of Consensus Forecasts Accuracy: The Czech national Bank Perspective"
- Walter A. Friedman, Fortune Tellers: The Story of America's First Economic Forecasters. Princeton, NJ: Princeton University Press, 2013.
- IMF forecasts can be found here: IMF World Economic Outlook, World Bank forecasts are here World Bank Global Economic Prospects, and OECD forecasts here: OECD Economic Outlook
- Two of the leading journals in the field of economic forecasting are the Journal of Forecasting and the International Journal of Forecasting
- For a comprehensive but quite technical compendium, see Handbook of Economic Forecasting, North-Holland: Elsevier, 2006
- A more compact and more accessible, but pre-crisis overview is provided in Elements of Forecasting, 4th edn, Cincinnati, OH: South-Western College Publishing, 2007
- A recent, comprehensive and accessible guide to forecasting is Economic Forecasting and Policy, 2d edn, Palgrave, 2011