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International organisations’ vs. private analysts’ growth forecasts: an evaluation

  • Economics


International organisations’ vs. private analysts’ growth forecasts: an evaluation * The author gratefully acknowledges Carlos R. Marques for the many valuable discussions and suggestions. The author also thanks Rita Duarte and João Sousa for their useful comments. The opinions expressed in the article are those of the author and do not necessarily coincide with those of the Banco de Portugal or the Eurosystem. Any errors and omissions are the sole responsibility of the author. ** Banco de Portugal, Economics and Research Department. INTERNATIONAL ORGANISATIONS’ VS. PRIVATE ANA- LYSTS’ GROWTH FORECASTS: AN EVALUATION* Ildeberta Abreu** ABSTRACT This article evaluates the performance of economic growth forecasts disclosed by three international organisations − the IMF, the European Commission and the OECD − and compares it with that of the mean forecasts of two surveys of private analysts − the Consensus Economics and The Economist. The aim is to help forecast users in answering the question of how much (little) confi dence they should place in the alternative forecasts that are available at each moment. The evaluation covers projections for nine advanced economies over the period 1991-2009. Several evaluation criteria are used: the quantitative and the directional accuracy of forecasts and, also, the ability to predict economic recessions. The results suggest that the forecasting performance of the international organisations is broadly similar to that of the surveys of private analysts. By and large, current-year forecasts present desirable features and clearly outperform year-ahead forecasts for which evidence is more mixed. 1. Introduction Considerable effort and resources are devoted to forecasting major economic variables and the publi- cation of forecasts usually attracts great interest of economists, policymakers and the general public. Although some of the disappointment that arises from time to time with macroeconomic forecasting might be justifi

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