With economic growth returning to the developed world, the end of years of quantitative easing and easy monetary policy is in view; inflation concerns are reviving, guaranteeing rising interest rates along with tightening liquidity. Emerging markets in Latin America are benefiting from higher commodity prices, and despite some political tensions are proving to be an increasingly attractive destination for investor funds.
Forecasting economic risk is an attempt to quantify the unknowable in a complex, ever-changing system. Although they often fall short of future realities, macroeconomic forecasting models that include thoughtful and comprehensive analyses of risk factors will provide launching points for serious and useful economic-policy discussion and planning.
The developed world’s economy has decelerated since the great financial crisis (GFC) of 2008, and despite the efforts of governments and central banks, growth rates have stagnated while inflation remains well below target.