The world COVID-19 pandemic has brought a major crisis that impacts all people’s livelihoods in the circumstances of substantial uncertainty. It is the first time since the Great Depression that advanced markets and emerging businesses are in a recession. The right forecast is hard to make because it depends on numerous outgoing factors, however, they still provide possible options for recovery to rely on.
In an article about the current situation, Amelia Thomson-DeVeaux discusses the forecasts of economic restoration. She says that the nature of recessions themselves makes it hard to predict as they have an unstable environment. The author says that most predictions are usually too positive, thus unreliable, which happened during the 2008 world crisis. The trajectory of the current situation depends on external factors that change every day. According to the IMF, Goldman Sachs, and Morgan Stanley, it is predicted to be a severe recession with the most significant drop in annual GDP since the first half of the last century (Thomson-DeVeaux, 2020). Thus, making a reliable forecast is not an easy task in current circumstances.
It is hard to predict the recession and how bad it will be because each one has a specific nature, and there is no use in referring to past experiences. Each recession is unique as it is based on the economic conditions that triggered the downfall. Thus, people who predicted the last ones correctly and the methods that they used are not necessarily right in this particular situation. However, forecasts are not useless, even though they might not be correct because they give people a range of possible perspectives rather than a reliable outcome.
If a recession lurks beyond this year’s point, economists are unlikely to predict it this far. The state of the economy is everchanging now, and it does not have patterns or past experiences to rely on. While policymakers are trying to adjust to the constantly new environment, the world faces tremendous uncertainty about what waits for it next. Nobody knows for sure how the situation will evolve, so it is vital to view forecasts as possible futures.
References
Thomson-DeVeaux, A. (2020). Even without a pandemic, it’s hard to forecast a recession. FiveThirtyEight. Web.