New Method Makes Economic Forecasts More Understandable

Researchers at KIT and HITS are developing a transparent procedure that makes the uncertainty of economic forecasts visible.

Multi-country forecast charts: Seven line graphs showing inflation rates (2018–2026) for Canada, Germany, France, the UK, Italy, Japan, and the US. — Forecast intervals for the G7 countries that were created using the new method.

Politics, business, and society are interested in how key economic indicators develop. Forecasts on growth and inflation are readily available, but the uncertainty behind them often remains unclear. The Karlsruhe Institute of Technology (KIT), together with the Heidelberg Institute for Theoretical Studies (HITS), demonstrates how this uncertainty can be measured in a straightforward manner.

Simple Method Instead of Complex Models

The researchers have developed a method that creates forecast intervals for growth and inflation in leading industrialized nations. This enables them to make statements such as “With 80 percent probability, inflation in Germany will be between 0.5 percent and 3 percent in 2026.” The method is based on point forecasts from the International Monetary Fund and an analysis of recent forecast errors.

“The method is transparent and easy to apply,” says Friederike Becker, research associate at the KIT Institute for Statistics. Melanie Schienle, professor at KIT and senior researcher at HITS, adds: “We use the expertise of the International Monetary Fund and achieve results that are comparable to complex statistical models.”

The method is suitable for all types of point forecasts, provided that data on past errors is available. It is interpretable, transparent, and can be used even without statistical expertise. Current forecast intervals are made available on a publicly accessible website.

jho, February 9, 2026