Why is forecast is difficult
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Answer:
Well, their ability to predict the weather is limited by three factors: the amount of available data; the time available to analyze it; and. the complexity of weather events
Economic forecasting is difficult for several reasons:
. First, economics is not an exact science. It can tell you in many cases what the likely outcome would look like, but it does not have universal quantifiable laws like e.g. physics. People behaviour is diverse and dependent on many factors, all cases and all countries are different from one another. So the actual outcome might turn out quite far from the forecasted one.
. Second, circumstances are ever changing. Random unexpected stuff keeps happening all the time in the economy, ranging from natural disasters to tech progress leaps. Of course it is not even remotely possible to fully account for those kinds of things, especially in longer term forecasts.
. Third, people with limited understanding of what to expect from economic forecasts keep demanding that economists correctly predict the future. This includes all kinds of top-managers or gov officials exerting pressure and then blaming their mistakes on incorrect forecasts. If economists could predict the future they would not need you, puny mortals :) Forecasting is your best guess given a set of assumptions - change the latter and the former will also change.
. And as with all kinds of forecasts, people do not appreciate it when your forecast turn out correct (like, that is your job, eh..). But be wrong once and everyone loses their minds, no matter if your forecast was wrong for legitimate reasons.