What has the global economy got to do with Leonardo da Vinca’s world-famous painting? Rather a lot, according to The Economist. Is Mona Lisa smiling or not? It’s hard to say. Look once and she’s smiling. Look again and she isn’t. No matter how often and carefully you look at her famous face, you’re never quite sure what’s happening. Leonardo da Vinci brought us this fascinating ambiguity through the use of sfumato, i.e. he blurred the lines around Mona Lisa’s face. And right now, something similar seems to be happening in the global economy.

Each time you take a closer look, you see something different. And economic forecasting has become more speculative than usual. Why is the picture so blurred? The Economist sees volatility as a key cause: Europe’s biggest land war since 1945, supply-chain turbulence, energy crisis and banking crashes have all impacted the world economy over the past year or two.

But as The Economist points out, several deeper-lying structural changes are a contributory factor. The disruptions to the global economy from the Covid-19 pandemic are still ongoing and have played havoc with economic forecasts. A second factor relates to the size of the samples used to predict economic developments. For a variety of reasons the response rates to such surveys in multiple countries have fallen dramatically in recent years. The smaller the sample size, the greater the data volatility. Another reason for confusion is seen in the increasing divergence between “hard” data, e.g. unemployment rates, and “soft” data such as people’s future expectations.

All this is making life much more difficult for both governments and businesses who need to take decisions based on reasonably accurate economic forecasts. Unfortunately, the global economy is likely to keep us confused with the “Mona Lisa effect” for some time yet.