All economic forecasting depends upon assumptions about the future, but the number of unpredictable factors (and the enormous number and variety of transactions) make precise forecasts impossible:
- Innovation can lead to new products and completely new markets.
- Geopolitical events cannot always be predicted with certainty. For example, Britain’s decision to leave the EU in a ‘Brexit’ was not forecast in the opinion polls or by most commentators – as reported in Uptin Saiid’s article, Here’s why the majority of Brexit polls were wrong, which also noted that “The U.K. EU referendum vote prompted a global massive market selloff as markets were priced in expecting a remain outcome. More than two trillion dollars were wiped out globally, the largest drop on record.”
- The weather has an economic impact.
Such factors are compounded by the complexity of the interactions between national economies.