Economists vs. the future: How accurate are economic forecasts?

This article is a part of Poland Unpacked. Weekly intelligence for decision-makers

Danish physicist Niels Bohr is said to have once remarked that "prediction is very difficult, especially about the future." It is hard to disagree, although that has hardly stopped us from trying to anticipate what lies ahead.

Forecasting is particularly popular in financial markets and among economists. Today, every major institution – from banks to public bodies and international organizations – is expected to publish regular forecasts of key macroeconomic indicators. But how accurate are these predictions, and how much weight should we give them?

Who produces economic forecasts?

Dozens of institutions produce forecasts of Poland's key macroeconomic indicators. Commercial banks make up the largest group, with at least a dozen publishing projections prepared by their own teams of economists. Other financial market participants, including some insurers and asset management firms, also produce forecasts. Consulting firms, think tanks, employers' organizations and selected academic institutions contribute their own predictions.

Forecasting is also undertaken by public institutions, including the Ministry of Finance and Bank Gospodarstwa Krajowego (BGK), Poland's state development bank, as well as international organizations such as the European Commission, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).

The National Bank of Poland (NBP), the country's central bank, publishes a particular type of forecast known as a projection. These projections assume that NBP interest rates remain unchanged, making it possible to assess how economic conditions are expected to evolve under a given set of monetary policy assumptions.

The sample

Comparing such a large number of forecasts would be complicated, particularly as they are published at different times. This also means they have different cutoff dates – the points beyond which incoming economic data are no longer incorporated into a forecast. Naturally, forecasts published later have an advantage over earlier ones, as their authors have more information at their disposal.

To simplify the comparison, we selected forecasts from three sources. The first is the IMF, a highly respected international economic institution that regularly publishes forecasts for almost every country in the world. The second is the European Commission, which closely monitors the economies of EU member states.

Our third source is the NBP's Macroeconomic Survey. Its published figures represent the median of more than 20 forecasts prepared by experts from financial institutions, including banks, as well as research institutes and think tanks. They can therefore be regarded as a reasonable approximation of the forecasting consensus among Polish economists.

To ensure the greatest possible comparability, we examine only forecasts published in the autumn of the year preceding the period they cover. For example, when assessing forecasts for 2023, we use predictions published in the autumn of 2022.

GDP growth forecasts: Usually too pessimistic

What does the comparison reveal? When it comes to GDP growth forecasts, all three sources show a tendency to underestimate economic growth. This is illustrated in the chart, where the colored dots represent forecasts from individual institutions, while the solid line shows actual GDP growth.

Between 2013 and 2025, forecasts proved more pessimistic than the eventual figures in seven years. The discrepancies were particularly pronounced in 2017 and 2018, when economists predicted GDP growth of 3–4%, but the economy ultimately expanded by 4.6% and 5.1%, respectively. Importantly, these figures are based on Statistics Poland's initial estimates. Subsequent revisions pushed the growth rates even higher.

Forecasters also underestimated the strength of the economic rebound following the first wave of the COVID-19 pandemic. In 2021, Poland's GDP surged by 5.7%, while forecasts ranged from 3.3% by the European Commission to 4.6% by the IMF.

Sometimes too optimistic

There have also been years when forecasts proved more optimistic than subsequent developments justified. The most striking example is 2020, although economists can hardly be blamed for failing to anticipate the outbreak of the COVID-19 pandemic.

Forecasts for 2023 also turned out to be overly optimistic. The median projection in the NBP's Macroeconomic Survey pointed to GDP growth of 1.5%. International institutions were more cautious, with the European Commission forecasting 0.7% and the IMF 0.5%. In the end, Poland's economy expanded by just 0.2%.

This does not mean, however, that economic forecasts are never accurate. In 2025, all three sources predicted GDP growth with remarkable precision. The economy expanded by 3.6%, compared with forecasts made a year earlier that ranged from 3.4% to 3.6%.

Interestingly, forecasts for 2022 also proved remarkably accurate, despite having been prepared in the autumn of 2021, before Russia's invasion of Ukraine in February 2022. At the time, economists expected GDP growth of between 4.7% and 5.2%. The actual figure was 4.9%.

How can this be explained? To some extent, it was a coincidence. On the one hand, the war triggered a massive influx of refugees into Poland, boosting consumption and increasing the labor supply. On the other, it caused energy and commodity prices to surge while dampening investment activity. Ultimately, these developments had sufficiently varied effects on the economy that GDP growth ended up close to the levels forecast before the war began.

Forecasting inflation: A difficult art

When it comes to inflation, forecasting errors follow a somewhat different pattern. Economists have generally overestimated price increases during periods of low inflation and underestimated them when inflation accelerated sharply. This is evident in the chart. Between 2013 and 2016, when inflation in Poland hovered around zero, forecasts were significantly higher than actual readings. Conversely, during periods of inflationary shocks, particularly in 2021–2022, forecasts substantially underestimated the actual rise in prices.

The results from the past two years are also revealing. Forecasts proved considerably more pessimistic than subsequent data warranted. This was particularly evident in 2024, when economists broadly expected inflation to exceed 6%, only for it to come in at 3.6%. Analysts may have overestimated the risk of a wage-price spiral while underestimating how quickly prices of many commodities and other goods would fall.

As a rule, forecasting inflation proves more difficult than predicting economic growth. But why? Unlike GDP growth, inflation has an explicit target toward which the central bank seeks to steer it. In Poland, that target is 2.5%, with a tolerance band of one percentage point in either direction.

The problem is that inflation is far more susceptible to sudden fluctuations than GDP growth. A major shock in commodity markets, triggered by a conflict in the Middle East, for example, can quickly render earlier forecasts obsolete.

Moreover, even when the scale of commodity price increases is known, predicting how businesses and households will respond remains difficult. What proportion of companies will raise their prices? By how much? How many households will cut spending? How will the government respond? Price formation is an exceptionally complex process, shaped by numerous interacting factors.

How accurate are economic forecasts?

How accurate have economic forecasts been over the past decade or so? When it comes to GDP growth, reasonably accurate. Of the 39 forecasts analyzed, almost half differed from Statistics Poland's initial estimates by no more than 0.5 percentage points. Fourteen forecasts proved too pessimistic, while seven were overly optimistic.

The mean absolute error – the average difference between a forecast and the actual outcome, regardless of direction – was 1.1 percentage points. Meanwhile, the median forecast error stood at -0.2 percentage points, indicating a slight tendency to underestimate economic growth.

Inflation forecasts performed considerably worse. Only seven of the 39 predictions differed from actual inflation by no more than 0.5 percentage points. The vast majority overestimated inflation, while nine underestimated it.

Forecasts from all three sources were relatively similar, meaning differences in their accuracy were modest. For GDP growth, the differences were virtually negligible. They were somewhat more pronounced for inflation, where the forecasts collected in the NBP's Macroeconomic Survey proved the most accurate.

The value of forecasts goes beyond the numbers

Specific figures tend to attract the most attention in economic forecasts, but they are not necessarily the most important part. Far more valuable are the scenarios outlining how the economy might evolve and the analysis of risks that could cause predictions to miss the mark. Particularly during periods of rapid change, of which there have been plenty in recent years, understanding the forces shaping the economy and their potential consequences matters more than precise point forecasts.

It is worth recalling a remark often attributed to John Maynard Keynes: "It is better to be roughly right than precisely wrong.".

GDP growth forecasts were relatively accurate, although they tended to underestimate economic growth. Between 2013 and 2025, economists predicted slower growth than actually occurred in seven of the 13 years, with a mean absolute forecast error of 1.1 percentage points. The discrepancies were particularly pronounced in 2017–2018, when the economy expanded by 4.6% and 5.1%, respectively, against forecasts of 3–4%.
Inflation has proved considerably harder to predict. Only seven of the 39 forecasts analyzed came within 0.5 percentage points of the actual inflation rate. One of the most striking forecasting errors occurred in 2024, when economists expected inflation to exceed 6%, but it ultimately came in at just 3.6%.
The years 2020–2022 illustrate the limitations of economic forecasting. The COVID-19 pandemic rendered forecasts for 2020 wildly inaccurate. Yet predictions for 2022, prepared before Russia's invasion of Ukraine, proved surprisingly accurate: economists expected GDP growth of 4.7–5.2%, while the actual figure was 4.9%. This highlights why forecasts should be treated as scenarios subject to uncertainty rather than reliable predictions of the future.