As the curtains close on 2023, the year emerges as a tapestry of failed forecasts, challenging the very essence of economic divination. In an era where predictions are grounded in economic data, this year’s divergence between forecasts and reality casts doubt on the perceived scientific nature of modern forecasting.

In the realm of stock markets, the discrepancy between projections and performance takes center stage. The US benchmark index S&P500, predicted to fluctuate between 3,800 and 4,500 in December 2022, defied expectations by hovering around 4,750, boasting a remarkable 24% return. Similar surprises unfolded in India’s Nifty50, surpassing predictions ranging from 17,500 to 20,000 to settle at 21,350.

The year commenced with a dichotomy – the hope for a Chinese rebound juxtaposed with fears of recession in advanced economies. China’s economic resurgence, anticipated post the easing of Zero Covid restrictions, failed to materialize, leading to a Moody’s downgrade of China’s A1 debt rating in December. Conversely, the US, amidst projections of an impending recession in December 2022, saw its economy thriving at 2.6% growth in December 2023, leaving early predictions in the dust.

Even the Reserve Bank of India, adopting a cautious stance, underestimated growth in February 2023, projecting a 6.4% GDP growth for 2023-24. However, as the year unfolded, growth proved resilient and robust, prompting a revision to a more optimistic 7%.

The fragility of forecasts becomes most apparent when examining the interplay between commodity pricing and real economic performance. Crude oil, a key indicator, was expected to average $100 a barrel in 2023, according to predictions in December 2022. Yet, it struggled to surpass $90 and currently hovers at $78 a barrel.

Ideological biases further muddle forecasting, evident in predictions surrounding the Bank of Japan. Despite over 80% of economists anticipating a shift from negative interest rates, the Bank of Japan maintained its ultra-loose policy, defying expectations.

As 2023 concludes, new forecasts are unveiled, with the Nifty50 at 24,200, S&P500 at 5,100, crude oil at $84, and speculations about rate cuts by the US Fed and ECB. However, the key takeaway is acknowledging forecasts as perspectives rather than definitive views. In the words of billionaire investor Ray Dalio, “He who lives by the crystal ball will eat shattered glass,” emphasizing the inherent uncertainty in predicting the future.