Economic forecast is the process of predicting future economic developments using existing information about past trends and current conditions. The concept of output most commonly forecasted is Gross Domestic Product (GDP), an accounting concept that measures the monetary value of all finished goods and services produced within an economy’s borders. A closely related concept is Gross National Product (GNP), which measures the production of an economy without regard to its current location.
As a result, there are many methodologies for making economic forecasts. For example, some use relationships between contemporaneous variables as a starting point for prediction, while others form and estimate equations that are then used to predict future values. The specific content of these equations often differs, but in general all methods are based on a belief that the relationship between two variables is jointly determined by their past values and the intervening factors affecting those values.
In our baseline scenario, global growth decelerates, led by a slowdown in advanced economies. Meanwhile, inflation is expected to decline notably, dropping from 2.4% in 2024 to an average of 1.3% over the forecast horizon.
Adding to this mix of uncertainty, the US administration has announced a series of tariffs that could have a major impact on trade flows and global growth. Despite some carve-outs and exemptions, the overall impact of tariffs is expected to be a drag on GDP, with growth decelerating by 0.8 percentage points in both 2025 and 2026.