An economic forecast is an educated guess of future economic activity. The goal is to provide insights and guidance on the best path forward for a business or a government, as well as to help inform investors. Many people use forecasts for a wide variety of purposes, from making decisions about their personal finances to determining the value of a stock. Government officials, for example, are often highly reliant on forecasts in developing their fiscal and monetary policies. Forecasts are also widely used by companies, helping them to set multi-year plans and budgets.
One of the challenges of economic forecasting is that many factors can influence the outcome. For instance, a forecaster’s education and working experience can affect their boldness and accuracy, but their underlying theory of how the economy works can also play a role in what they pay attention to when making projections.
For example, if a forecaster believes that the supply of goods is determined by how much money is available, then they will likely place more emphasis on indicators related to the availability of cash and less on things like demand, which are harder to track. This can lead to subjective or biased projections.
The global economy is expected to slow to near stall speed in 2026 as tariff-related inflation eats into profit margins, depresses household spending, constrains business investment and weighs on central bank monetary policy. Underlying inflation should fall, but interest rates are expected to remain elevated as governments unwind debt.
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