Appendix C-Contd.
Diagram 1
Tests of Forecasting Sensitivity
A number of sensitivity tests are applied to the forecasts. Perhaps the most important is the impact of changes in GDP assumptions on forecasts. Illustrative tests are shown below.
It should be noted that only the revenue variation is reflected. In practice, any persistent variance from the basic GDP growth assumption of 54% would also be followed by an upward or downward change in permitted expenditure growth.
$ Billion
+6
BREAK
EVEN
+5
+4
+3
+2
+1
0
ī
-2
Annual GDP Growth
in Real Terms:
61%
51%
41%
86-87
87-88
88-89
89-90
90-91
35 -
Year