Macroeconomic analysis and forecasting

In Economic Analysis Team

Macroeconomic volatility and related structural changes (e.g. disruptions in the supply chain) translate into increased uncertainty in business planning across many industries. Our analyses help Clients to be up-to-date with macroeconomic trends as well as to understand whether and how macroeconomic factors affect their key business metrics such as consumer demand (e.g. in the case of an FMCG company) or default risk (e.g. in the case of a lending institution). 

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The team

Marek Rozkrut

Marek Rozkrut

EY EU & CESA Chief Economist; EMEIA Economists Unit Head

What EY can do for you

EY Economic Analysis Team (EY EAT) supports clients by preparing or assessing macroeconomic forecasts or scenarios, analysing the impact of the macroeconomic environment on business as well as building or augmenting business forecasting models. 

EY EAT leverages multi-year experience in macroeconomic analysis and macroeconometric modelling obtained in the private sector, the Central Bank, the Ministry of Finance and the academia by:

  • Following and analysing current macroeconomic developments on the ongoing basis as well as preparing in-house macroeconomic forecasts for EMEIA (Europe, the Middle East, India and Africa) region

  • Assessing macroeconomic forecasts and scenarios, particularly in support of IFRS 9 audit, by checking their internal consistency and alignment with the current state of knowledge 

  • Preparing tailored macroeconomic forecasts or scenarios and building macroeconomic forecasting models that suit client needs

  • Analysing the impact of macroeconomic environment on client’s business (e.g. demand for client’s products, prices of key components needed for production, prices of financial assets in the client’s portfolio etc.) using tailored econometric models

  • Augmenting the client’s business forecasting models with macroeconomic variables

  • Building business forecasting models that take into account business-specific and macroeconomic factors using state-of-the-art econometric methods 

  • How does it work?

    EY EAT follows and analyses macroeconomic conditions on the ongoing basis, always staying up to date with current developments. We cover a broad range of economies, focusing on Europe and a broader EMEIA region. Together with multi-year experience and very strong quantitative skills, this allows us to draw unique insights and prepare realistic forecasts, which are consistent with economic theory and the current state of knowledge.

    We adapt the class of models used – from econometrics to machine learning — to the research question. For example, econometric techniques can help us to quantify the impact of macroeconomic factors on the business and identify key drivers of performance. Through the use of machine learning and data visualization techniques, we can identify patterns and trends in the data that can inform more accurate forecasting.

    In addition to understanding the changes that are happening in the economy as a whole, it is also important to understand how these changes are affecting specific businesses and their customers. This requires analyzing industry-specific data, customer behavior, and other factors that may influence demand for a particular product or service. Therefore, next to economic variables, we include other important industry-specific factors in the analysis.

    We produce our in-house macroeconomic forecasts using a large-scale model of the global economy, developed from the Oxford Economics Global Economic Model. When the Client needs a macroeconomic forecast which is more tailored to their needs or wants to build their own model, we use advanced econometric techniques such as (Bayesian) Vector Autoregressions (VARs) or Structural Equation Models. 

    The impact of macroeconomic variables on the client’s business is assessed using a wide range of econometric methods, depending on the specifics of the business studied and data availability. Other than macroeconometric methods mentioned above, we use panel data methods and GARCH models, for example. In specific cases the analysis may be supported by non-econometric methods such as Computable General Equilibrium (CGE) models or data science techniques.

    We can provide a very detailed description of data, codes and manuals so that the delivered models can be used and/or further developed by the Client’s analytical teams.

  • What purpose can it serve?

    • Enhances client’s understanding of the current economic environment and macroeconomic outlook, which may help make operational and strategic business decisions

    • Provides numerical macroeconomic forecasts, which may be used as inputs in client’s business forecasting models

    • Improves client’s understanding and quantifies the impact of the macroeconomic factors on the client’s business, which may help with risk management, day-to-day business operations and strategic decisions

    • Improves client’s ability to forecast key business variables 

How EY can help

Economic Impact Assessment

Economic impact assessment (EIA) conducted by EY EAT is a formalised analysis of the overall.

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Shadow economy analysis

EY Economic Analysis Team (EY EAT) estimates the size of the shadow economy in various sectors and economies, assesses its consequences, and develops recommendations for fighting the shadow economy.

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Consumer demand analysis

Analyses conducted by EY encompass a wide variety of solutions aimed at delivering insights into consumer willingness-to-buy and customer segmentation. We help our Clients in planning production volume and pricing in the view of various changes in market environment: competitor landscape or prices of the substitute products. We identify main demand drivers and quantify their impact on sales.

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Other economic analyses

EY Economic Analysis Team (EY EAT) can support the Client in many different economic analyses, providing micro.

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Publications

Our selected published reports and selected scientific articles of the members of EY EAT team.

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