Looking to the future economic scenario is mostly all about looking at what the current economic situation is and how it follows the same pattern at some point in the past. It sounds like a simple case of finding a similar piece of the puzzle to find out what comes next. But, it really is complicated by a lot of variables, each of them causing the economy to move differently. There is no absolute way to tell how economies would work. What economic forecasting does is to simply point out the patterns and project how particular economies might move given specific variables. It is an economist’s task to look into the various factors that affect economic activity and be able to tell what future behavior might be expected from that economy.
If there is no way of telling how exactly an economy would behave, why then do we have to even attempt to do a forecast? Economic forecasting, while it might not be one hundred percent true all the time, would give you an approximation of what you might expect. It serves as a guide for both medium and long term financial planning. For businesses, forecasts could help them prepare for perhaps some belt-tightening measures for predicted difficulties in sourcing their raw materials from another country that is expected to have labor problems with their shipping industry. For individuals, forecasts could serve as a guide for financial planning. The right foresight, your chances of choosing the financial instrument that would give you the best yield is increased.