An economic forecast is an estimate of future national output, used for planning and decision making. It is one of the key inputs to monetary and fiscal policy.
Economists use a wide range of approaches to produce forecasts. At the low end are judgmental methods that rely on the experience and understanding of individual forecasters, while at the high end are dynamic stochastic general equilibrium (DSGE) models that rely on modern economic theory.
As a result, forecasts can vary widely. However, in recent years, increasing effort has been put into developing long-range forecasts, which extend five or ten years into the future. Businesses increasingly recognize the value of these forecasts, which can help them plan for expansion and financing needs.
The region’s growth prospects have been weakened by rising trade barriers and elevated policy uncertainty. Regional economic activity is assumed to slow, with exports and remittances falling and household consumption weakening. Meanwhile, a sharper-than-expected slowdown in the United States could dampen imports and raise debt-servicing costs, potentially adding to already challenging operating conditions.
The outlook has been downgraded since the spring of 2025, primarily due to the anticipated effect of higher US tariffs on global growth. While robust domestic demand in China and the US is expected to support a mechanical lift in first-quarter trade growth, tariffs are projected to weigh heavily on subsequent economic activity, especially through the rest of this year and into next. Moreover, uncertainties around the duration of the tariffs, possible exemptions and retaliation remain substantial.
