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What are the types of Economic Forecasting?


There are different types of forecasting done by the business organisation to ascertain the future of a business entity. Similarly different types of forecasting are done to know the economic condition under which company work.
Types of economic forecasting are:
·         Short term Forecast
·         Intermediate forecast
·         Long term forecast
The short term forecast includes less than a year period. In this forecast the company can find out the economic conditions which affect the company’s work for short period. The short term forecast is useful for speculators who earn high return by holding securities for short term. 
The intermediate forecast includes more than a year period but less than 5 year. In this forecast the company can find out the economic conditions which affect the company’s work for more than a short period.
The long term forecast include forecast for more than 5 years. The long term forecast is preferred by investors who invest in stock market for more than 4 to 5 years.
The different techniques are used to forecast the economic activity. The economic activity which affects the activity of a company is forecasted by using below techniques:
o   Anticipatory Survey: In this survey the opinion of an expert or forecaster is included or used. It includes 3 methods: Delphi method, Cross impact analysis and multiple alternatives.
o   Delphi Method: In this method the opinion of an expert are considered and in every topic the opinion expert are used to forecast the economic conditions.
o   Cross Impact Analysis: Under this technique trend are decided by experts and researchers and after that they find out the cross impact on other trend.
o   Multiple alternatives: Under this method the alternatives of an issues are find out by researchers and also its probability of occurrence.
o   Time series analysis:  In this analysis the previous or past data are compared to forecast the future course of action or situations. In the time series analysis the data of previous years are plotted in graph and it helps to show trends and patterns.
o   Gross National Product: Under this method the national data are used to forecast the economic condition. The national data are like un-employment rate, growth rate, birth rate etc.
o   Mathematical equation: Under this method the economist form the mathematical equation which is formed with the help of past economic activity. The equation expresses the relationship of variables. The equation helps the economist to forecast the economic conditions.
o   Diffusion Index: This method is used as indicator of the expansion or contraction. It is very easy and simple to calculate the index. Diffusion index = Number of members in the set in the same direction/ Total number of members in the set
o   Monetary indicators: The monetary indicator is also helpful techniques to forecast the economic activity in future. The changes in the monetary factor in economy like increases in interest rate, increase in growth rate, changes in corporate profit etc. all affects the economy.  For example increase in the corporate profit helps to predict the stock price of the company in future.









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