I am working on a time series model with exogenous regressors. I am using the ARIMA function in R which resulted in a ARIMA(1,0,2) model. I also need to forecast for the next 10 months using this model. I am using the R forecast package predict function for the same:
Forecast<- predict(model, newxreg = newxreg)
Since the model has a MA term and I am trying to forecast 10 months ahead of time, I do not have the information for the MA terms in future since I don't know the actuals. So how is the package providing the forecast results?
Can someone please help me understand how forecast package (predict function) in R is estimating the future residual terms and providing the forecasts??