A1094
Title: Step by step: A quarterly evaluation of EU commissions' GDP forecasts
Authors: Katja Heinisch - Halle Institute for Economic Research (Germany) [presenting]
Abstract: Annual growth forecasts by the European Commission are important figures for policy-making and provide a benchmark for many forecasters. However, they are usually based on quarterly estimates, which are hardly known and do not get much attention. Therefore, a detailed analysis is provided for the multi-period ahead quarterly GDP growth forecasts for the EU, euro area, and several EU member states with respect to first-release and current-release data. Forecast revisions and forecast errors are analyzed, and the results show that the forecasts are not systematically biased. However, a significant overestimation of short-time horizons is identified for several member states. The highest performance is not achieved for the current quarter for all countries, although a high forecast revision occurs in the last step (from one-quarter-ahead forecast to the current quarter). Furthermore, the final forecast revision in the current quarter is generally downward biased for almost all countries. Overall, the differences in mean forecast errors are minor when using real-time data or pseudo-real-time data. The forecast performance also varies across countries, with smaller countries and Central and Eastern European countries (CEEC) having larger forecast errors. Evidence is provided that there is still room for improvement in forecasting techniques both for nowcasts but also forecasts up to 8 quarters ahead.
