Economic forecasting techniques and their applications

Forecasting techniques have a widespread area from simple regression to complex metaheuristics like neural networks and genetic algorithms. Economic forecasting is the process of attempting to predict the future condition of the economy. It is the projection or estimation of statistical measures of the performance of a country, group of countries, industry, firm or community. This involves the use of these techniques utilizing variables sometimes called indicators. Some of the most well-known economic indicators include inflation and interest rates, GDP growth/decline, retail sales and unemployment rates. While economic forecasting is not an exact science, it remains an important decision-making tool for businesses and governments as they formulate financial policy and strategy. Concepts forecasted are often standard measures of economic or business results such as production, employment, prices, incomes, spending, sales, profits and other similar statistics. This chapter summarizes and classifies the forecasting techniques from classical logic to fuzzy logic and from metaheuristic techniques (e.g. neural networks or ant colony optimization) to integrated metaheuristics (e.g. neuro-fuzzy). The chapter also includes numerical examples.