G4 Long-Term Macro-Financial Forecasts
In this paper, we focus our attention on medium-to long-term forecasts of univariate macrofinancial variables, which likely incorporate long-term trends deriving from geopolitics (including political and policy cycles), demographics and technology. In order to take into account the uncertainty that these factors inherently carry, we provide range forecasts (as opposed to point forecasts). The estimate of these confidence intervals (with different probabilities) better reflects the possible distribution of events around their central tendency.
Using the latest econometric techniques to measure uncertainty, we estimate medium- to long-term range forecasts for GDP per capita, inflation, real 10-year yield and spot FX rates for the U.S., Japan, Germany and the UK, 6, 8, 10 and 25 years out, with a confidence of 50%, 70% and 90%.