Many institutions engage in economic forecasting, including international organisations such as the International Monetary Fund, World Bank and the OECD, national governments and central banks, and private sector entities, including think-tanks, banks, consultants and companies. Some forecasts are produced annually, but many are updated more frequently.
Economists select which variables are important to the subject material under discussion. Economists may use statistical analysis of historical data to determine the apparent relationships between particular independent variables and their relationship to the dependent variable under study. For example, to what extent did changes in housing prices affect the net worth of the population overall in the past? This relationship can then be used to forecast the future. That is, if housing prices are expected to change in a particular way, what effect would that have on the future net worth of the population? Forecasts are generally based on sample data rather than a complete population, which introduces uncertainty. The economist conducts statistical tests and develops statistical models (often using regression analysis) to determine which relationships best describe or predict the behavior of the variables under study. Historical data and assumptions about the future are applied to the model in arriving at a forecast for particular variables.[1]
The economist typically considers risks (i.e., events or conditions that can cause the result to vary from their initial estimates). These risks help illustrate the reasoning process used in arriving at the final forecast numbers. Economists typically use commentary along with data visualization tools such as tables and charts to communicate their forecast
who needs economic forcast, and why
Government Agencies and policy makers:
to be able to forcast a projection on the neer future to access what is needed to be don in the future to acomplish the government institutions' goals, andto analysses polocies
for private business it is emperical to be able to know what may happen in the future and anticipate economic shift even before a new policy is announce by the government and to have a full understanding of the international market