A comprehensive economic forecast looks at a wide variety of factors in the economy and provides a range of possible outcomes for each element. Those elements include consumer spending, government spending and business investment. A broad range of methods are used to make these long-range projections, from simple comparisons to sophisticated econometric models.
Long-range forecasts are important for many reasons, including helping businesses plan their own investments and making informed policy decisions by government officials. Economic forecasts are also a vital input for the Federal Reserve’s monetary-policy committee in making decisions about the appropriate level of interest rates. The forecasts are usually based on a variety of sources, such as data from the Bureau of Economic Analysis (BEA), private sector surveys and reports on new commitments to invest in capital equipment.
Overall economic growth is projected to slow worldwide this year and in 2026, reflecting a sharp rise in trade barriers and high levels of policy uncertainty. Mexico’s economy is likely to stall this year and rebound only slowly in 2026, as higher tariffs push up the costs of imported goods and limit domestic demand. And subdued investment by business and consumers could exacerbate high interest rates, constricting growth in the region’s debt-servicing capacity. Meanwhile, the poorest countries face a difficult challenge in reducing poverty without the benefits of global growth and increased aid. To help them do so, they need faster GDP growth and improved investment opportunities. This requires multilateral cooperation and a clearer framework for resolving trade tensions.