Medium- and Long-Run Projections

Interest in medium- and long-run projections is on the rise, not least due to concerns about the economic implications of population ageing, but also against the background of the ongoing rebalancing of the global economy towards some large emerging economies, especially in Asia. Medium- and long-run projections differ from the short-run forecasts discussed in previous chapters. Beyond the next few quarters, it is indeed pointless to try and forecast the business cycle. However, it is possible and instructive to look at the underlying trends further out. To differentiate the two types of exercises, the term ‘projection’ tends to replace that of ‘forecasts’ for longer-run horizons. Even so, projections are and should be quantified rather than purely qualitative. In this context, the numbers are not meant to convey what would be an illusory sense of precision. Rather, they serve to illustrate broad trends and to highlight constraints, notably through recourse to alternative scenarios.