Long-term economic and market forecasts gobble up space in financial publications Fisher Investments UK reviews. In our experience, many readers wish to know what will happen in the future – and myriad organisations try to feed the desire. But in our view, forecasts that seek to predict the distant future are of limited value for investors.
A variety of sources produce long-term forecasts, from government agencies and supranational organisations to monetary policy institutions and private research outfits – and many receive heavy attention in financial commentary Fisher Investments UK reviews. Some high-profile examples: the UK’s Office for Budget Responsibility’s (OBR’s) government debt forecasts; the International Monetary Fund’s “World Economic Outlook”; and any major monetary policy institution’s inflation projections. Whilst we think long-term forecasts are of limited value, our opinion doesn’t apply to a specific report, agency or outfit.
Based on our research, some common assumptions typically underpin these forecasts. They tend to extrapolate current conditions forward – an exercise in straight-line math presuming recent conditions and/or historical averages will apply. We don’t dismiss using history to estimate probabilities, but real life doesn’t operate in a smooth, linear fashion based on Fisher Investments UK’s experience. For instance, in its March 2017 Economic and Fiscal Outlook, the OBR based its Consumer Price Index (CPI) inflation rate projections on a host of assumptions, including Brent Crude oil prices (the global oil price benchmark) hovering around $60 per barrel through 2022 – basically extrapolating the then-present conditions forward.[i] But in reality, oil prices rose in 2017 and 2018, topping $85 per barrel that autumn.[ii] Oil then plunged in 2020 as global COVID restrictions reduced demand drastically, then soared well past $100 per barrel in 2022 as the war in Ukraine and sanctions against Russia sparked talk of a global supply shortage.[iii] This isn’t the sole reason actual UK CPI inflation didn’t match the OBR’s projection of a steady 2.0% annual rate from 2019 onward – and here at Fisher Investments UK, we have our quibbles with this conceptual framework – but we think it seems fair to presume it contributed.[iv]
Alternatively, consider the US-based Energy Information Administration’s (EIA’s) “Annual Energy Outlook: 2005,” which shared several 2025 global oil supply and demand scenarios – based largely on assumed production from the Organisation of Petroleum Exporting Countries (OPEC). As the report states, “OPEC members are assumed to be the principal source of the marginal supply needed to meet increases in demand; consequently, OPEC member country production varies more than non-OPEC production in response to changes in demand requirements.”[v] The EIA presumed OPEC would produce 30.6 million barrels per day (mbpd) in 2005 to eventually 55.1 mbpd in 2025, presuming a steady annual increase of 2.7%.[vi] Fast forward to the present, and OPEC+ (which includes non-member countries like Russia) added 35.7 million barrels per day last year – a far cry from that 2005 projection.[vii]
Those extreme readings demonstrate how the distant future is unknowable. A lot can change. Making an accurate forecast years into the future means predicting human behaviour, consumer demand, production trends, politicians’ decisions and long-term technological developments – along with the associated unintended consequences. Fisher Investments UK doesn’t think any forecast crafted today can account for those changes.
Another way to see this: peak oil forecasts. The original peak oil theory, which got traction in the mid-20th century, held that global production of crude oil – a finite commodity – would eventually enter terminal decline.[viii] That would then lead to higher prices as supply fell. Yet peak oil didn’t materialise, thanks in part to unforeseen breakthroughs – led by America’s shale revolution, in which US producers invested in the technology and processes (hydraulic fracturing and horizontal drilling) to access vast shale oil reserves, adding substantially to global oil supply.[ix]
Some commentators Fisher Investments UK follows now claim peak oil demand is upon us – and that oil consumption will fall due to consumers’ preference for low-carbon technologies.[x] Now, at some point, a finite resource will decline as supply dwindles and society switches to new alternatives. But we think long-term forecasts predicting this outcome – and particularly the associated negatives – haven’t come true yet because they can’t predict the precise ways producers and consumers adapt.
Fisher Investments UK thinks investors benefit by not using long-term forecasts as part of their investment decision-making. Even if those outlooks turn out to be correct, waiting for years to be proven right could carry a hefty opportunity cost (the value of something given up in exchange to do something else). What if an investor avoided equities in an area with a weak long-term economic forecast? That region’s equities may deliver stretches of outperformance before the economic weakness supposedly arrives. Even if the forecast eventually comes true, it needn’t imperil equities – which we find pre-price and reflect widely known information (including publicised outlooks). The weak forecast could reduce sentiment toward the region, creating a larger proverbial wall of worry for its equities to climb.
Or imagine being an investor who wanted to avoid Energy equities in the 21st century based on peak oil forecasts. Those predictions have yet to come true, and during that time, Energy equities outperformed global equities in 12 of the past 25 years – meaning that acting on a yet-to-be-realised forecast would lead to missing out on returns.[xi] In Fisher Investments UK’s view, investors benefit by focussing on the next 3 – 30 months – anything beyond that timeframe is unknowable.
Interested in planning for your retirement? Get our ongoing insights, starting with a copy of 7 Secrets of High Net Worth Investors.
Follow the latest market news and updates from Fisher Investments UK:
This document constitutes the general views of Fisher Investments UK and should not be regarded as personalised investment or tax advice or a reflection of client performance. No assurances are made that Fisher Investments UK will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. Nothing herein is intended to be a recommendation or forecast of market conditions. Rather, it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. In addition, no assurances are made regarding the accuracy of any assumptions made in any illustrations herein. Fisher Investments Europe Limited, trading as Fisher Investments UK, is authorised and regulated by the UK Financial Conduct Authority (FCA Number 191609) and is registered in England (Company Number 3850593). Fisher Investments Europe Limited has its registered office at: Level 18, One Canada Square, Canary Wharf, London, E14 5AX, United Kingdom. Investment management services are provided by Fisher Investments UK’s parent company, Fisher Asset Management, LLC, trading as Fisher Investments, which is established in the US and regulated by the US Securities and Exchange Commission.
Investment management services are provided by Fisher Investments UK’s parent company, Fisher Asset Management, LLC, trading as Fisher Investments, which is established in the US and regulated by the US Securities and Exchange Commission. Investing in financial markets involves the risk of loss and there is no guarantee that all or any capital invested will be repaid. Past performance neither guarantees nor reliably indicates future performance. The value of investments and the income from them will fluctuate with world financial markets and international currency exchange rates.
___________________________________________________________________________________
[i] “Economic and Fiscal Outlook,” Office for Budget Responsibility, March 2017.
[ii] Source: FactSet, as of 15/7/2025.
[iii] Ibid.
[iv] Ibid.
[v] “Annual Energy Outlook: 2005,” Energy Information Administration, pg 44.
[vi] Ibid.
[vii] Source: Energy Information Administration, as of 15/7/2025.
[viii] “Understanding Peak Oil: What It Is and Why It Matters,” Michael Kern, OilPrice.com, 29/8/2024.
[ix] “Shale Oil and Shale Gas Resources Are Globally Abundant,” US Energy Information Administration, 2/1/2014.
[x] “Will Peak Demand Roil Global Oil Markets?” Matthew Higgins and Thomas Klittgaard, Liberty Street Economies, 14/4/2025.
[xi] Source: FactSet, as of 14/7/2025. Statement based on MSCI World Index and MSCI Energy sector annual returns with net dividends, in pounds, 1999 – 2024.