As we are living in an ever-changing economic environment, the starting point of every forecast is a set of forward-looking assumptions, at least with respect to main economic variables such as future market interest rates, exchange rates, crude oil prices and both world trade and growth. The fact that economic projections are built on assumptions highlights their typical conditional nature.
Such assumptions are then used as input factors for a macroeconomic model of the economy as a whole, which, as a result, provides a central forecast, reflecting the most likely outcome over the projection horizon, also called the “point forecast” or the “baseline scenario”. So far, so good.