Evanomics

Consensus forecasts

• Evan Davis | Vital Statistics |
• 29 Jan 07, 11:21 AM

The latest Consensus Forecasts has arrived on my desk today.

For those of you who are not familiar with it, it is a monthly private, subscription publication (£370 a year I'm afraid), which simply collates all the reputable economic forecasts for all the main developed economies. You get the forecasts for this year, and for next.

It's an excellent idea. And even better, the team there calculate the average of the forecasts too. If you're a big company, why bother to hire an economist to make forecasts, when you can simply buy the output of existing forecasters for a fraction of the cost?

Anyway, being a January edition of Consensus Forecasts, we get a first glimpse of the forecasts being made for 2008, as well as 2007.

And the news is, for the UK, economists think (on average) we'll get 2.5% growth this year, and 2.4% next.

In other words, the forecasters have nothing better to assume, than that the UK grows at its average rate for the next couple of years. It's not a bad guess in the absence of any better information.

As for the US and Eurozone, the forecasters think they both have a slowdown this year (2007 growth of 2.4% for the US, and 2.0 for the EZ). But the US bounces back next year, and the Eurozone does not. (3.0 for the US and 2.1 for the EZ).

My advice: forecasts for the current year are quite useful. They are often wrong, but given where the economy is at the start of year, you can normally determine something useful about where it'll finish.

The same does not apply to next year's forecasts though. They offer a spurious precision that economists can't realistically deliver.

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