Macroeconomic Forecasting During the COVID-19 Pandemic

Since the outbreak of COVID 19, forecasters have been keener in knowing the economic prospects for 2020. Several real GDP growth projections have been updated and revised towards steep decline in growth due to disruptions caused by the outbreak. The COVID 19 pandemic has presented extreme circumstances and uncertainty in almost every aspect of society. Since the Covid-19 pandemic began, we’ve seen widespread uncertainty and divergence in macroeconomic projections.

The short answer to why there is so much divergence in the forecasts is because no one knows what is going to happen. The rate of economic impact and speed of policy changes have never been higher. Governments are deliberately provoking recessions to save lives. Containment measures, nationwide lockdowns are crushing the domestic activities disrupting regular supply chain. Miscalculating the end date of lockdown by weeks severely hamper the economic forecast. Many governments have adopted emergency powers allowing them to rule by decree. What’s more, the monetary stimuli announce to cushion the falling economy to palliate the downturn dwarfs that seen during the financial crisis. For analysts, coping with the constant changes in measures and properly integrating them into forecast models poses challenges.

Transilience analytics new study on How COVID-19 Outbreak Is Affecting Economic Forecasting gauges this situation and offers insightful analysis.         

Our study explores other key issues including:

  • The impacts of social distancing measures on economy
  • Patterns of consumer behaviour in future
  • The urgent need for high- frequency economic data
  • Adjustments in the forecasts by the drop in economic activity