Our Difference Summarised
- EQ Economics is focused on the needs of business leaders, not policymakers or money managers
- We make a distinction between time horizons, reflecting the different requirements of business leaders
- Our operational and cyclical views of the economy are anchored by long-term analytics and themes.
- Our experience allows us to balance agility (changing our views as new realities emerge) with the commitment to views that endure
Built for business, EQ Economics is focused on providing economic analysis, risk assessments and projections that help business leaders navigate an increasingly volatile and uncertain operating environment.
EQ Economics may look like a traditional economic forecasters, but we are different. We use long-term anchors to frame our cyclical economic views. We take a scenario approach to forecasting and projection.
Most importantly we are focused on the needs of business leaders and their requirements. EQ Economics can support business leaders with strategic thinking and assessment, business planning and budgeting, and operational risk management.
Integrating Time Horizons for Strategic Clarity and Operational Agility
Business strategy, budgeting and operations happen over different future time horizons, from the long-term to the year ahead. EQ Economics utilises three distinct time horizons for supporting business decision making: the year ahead (operations and execution), the economic cycle (budgeting and planning) and the long-term (strategic thinking).
The use of projection scenarios across these time frames creates a benchmark for executives to monitor the evolution of the economy and their industry.
Adopting a structured approach to business strategy strengthens an organisation’s capacity to react promptly and efficiently to a range of circumstances. This includes not only those developments that are anticipated—albeit with some uncertainty—but also situations that arise unexpectedly.
Whether these circumstances present themselves as opportunities for growth or as potential threats to operations and financial outcomes, a well-defined strategic framework positions businesses to make informed decisions and take decisive action. By benchmarking progress and using scenario-based planning across various time horizons, leaders are better equipped to navigate the evolving economic and operational landscape with agility and confidence.
Horizon 3: The Secular Backdrop
Long-Term Trends
Horizon Three addresses long-term trends and secular forces that shape strategic thinking and the formulation of long-range business plans. These influences extend beyond the economic cycle, encompassing demographic shifts, technological adoption and innovation, evolving political landscapes, and changes in the natural environment. Understanding these non-economic drivers is crucial for shaping enduring strategies and ensuring that businesses remain relevant and competitive in a changing world.
Horizon 2: The Business Planning Horizon
3 Years Ahead
Horizon Two covers the traditional planning cycle for most organisations, typically looking three to four years into the future. This period is characterised by annual business planning, where projection scenarios are used to benchmark expected outcomes and inform operational and execution plans. Economic forecasters often concentrate on this timeframe, providing projections that guide annual budgeting, resource allocation, and medium-term strategy. By benchmarking against a set of scenarios, organisations can better anticipate market developments and prepare for a range of possible futures.
Horizon 1: The Operational Timeframe
12–18 Months Ahead
This horizon focuses on the immediate future, encompassing business execution and operational planning for the next 12 to 18 months. During this period, leaders must manage labour and capital resources in real time, respond swiftly to unforeseen events, and adapt operational plans when economic conditions become less favourable. Conversely, in more advantageous environments, businesses can increase operational leverage to maximise returns. Effective risk management and agility are paramount in this timeframe to ensure business continuity and resilience.
Dynamic Assessments and Scenario-Based Forecasting
EQ Economics assessments and projections are not static; they are ‘live’, continually reviewed and updated as new information emerges. While we do not make changes to our forecasts and projections lightly, decades of experience have honed our ability to discern when a shift is warranted and when consistency is required. In line with the old saying, we know “when to hold, and when to fold.”
We rarely fold. Rather than relying on a singular economic forecast, we employ a scenario framework. This approach enables us to explore a range of potential economic pathways and present risk-weighted perspectives, all anchored by a central case. By doing so, we provide a more comprehensive understanding of the evolving economic and business landscape.
Technique is Everything
To achieve deeper insights into the future, we integrate the scientific methods of economics, demography, and politics with historical analysis and the creative thinking necessary to envisage potential future states.
We approach new information with a risk management mindset, carefully assessing the probability of different economic outcomes to ensure we know which trajectory the economy is on.
One of the most important forecasting skills is working out whether new information is noise or signal. Our projections are probability and confidence weighted, we will let you know when we have a strong view but we will also be honest when we are genuinely are unsure.
EQ Economics introduces a unique capability to the Australian market by blending a variety of forecasting techniques with a high level of client engagement. While advances in computing power and the proliferation of data offer new insights into economic dynamics, these tools alone are insufficient. Sound judgement remains an essential element of the forecasting process and will continue to be so for the foreseeable future.
Until a truly comprehensive economic model exists, no amount of computing power or data can entirely substitute for nuanced judgement that experience brings. The most useful economic projections are those that combine analytics from multiple disciplines with an in-depth understanding of human behaviour and historical context.
Nevertheless, the availability of better and more timely data, coupled with advances in computing power and artificial intelligence, is expanding the range and speed of statistical and analytical inputs. This progress enhances our ability to illuminate macroeconomic issues. Our capability to gather diverse facts, analyses, and opinions is accelerating, and our understanding of the psychological aspects of economic behaviour continues to grow.
EQ Economics is committed to investing in these capabilities at every opportunity, ensuring that our clients benefit from the most update to date and robust economic insights available.