An economic forecast is an estimate of future Gross Domestic Product (GDP). GDP is the monetary value of all finished goods and services produced within a country’s borders over a specified period. It is the most widely used measure of economic output. The concepts of GDP and national income are closely linked.
The global economy is slowing through 2025 and into 2026 as rising trade barriers, elevated policy uncertainty, and fading fiscal support weigh on growth. However, the outlook remains positive if policies can foster confidence and predictability while addressing downside risks.
A key concern is that the slowdown could be accelerated if higher tariffs and interest rates depress consumption, investment, and employment. In addition, delinquency rates on credit cards and auto loans suggest consumers may struggle to increase spending, limiting the effect of looser monetary policy.
Economic forecasts are important for companies because they help them decide which products and services to produce and how much to invest in them. Government officials also use them to determine what fiscal and monetary policies to implement.
The accuracy of economic forecasts depends on the method of prediction. Model-based methods such as econometric models use historical data inputs and algorithms to generate a forecast for one or more variables. Judgmental or consensus forecasts use expert knowledge to fine-tune forecasts generated by a model. Most countries and regions conduct a survey of forecasters to gather expectations of various indicators, including real GDP growth. These surveys are a valuable source of information, but they suffer from political bias. Research by Wieland and Wolters shows that model-based forecasts outperform judgmental forecasts at short-run horizons, but they do not perform as well at longer-run horizons.