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Economic activity in 2010: Forecasts and reality

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  • Wolfgang Nierhaus

Abstract

This article discusses the reasons for the differences between the forecasts for 2010 and what real occurred. In light of the enormity of the economic dislocations in the world that were caused by the global financial and economic crisis of 2008/09, economy forecasting was pushed to its limits and greater forecasting revisions and forecasting mistakes than usual were the result. For the dimensions and the temporal course of the economic collapse in Germany and the rapid subsequent economic recovery there was simply no prior experience that the forecasters could have systematically evaluated. The economy thus progressed much better in the course of 2010 than the Ifo Institute predicted in its December 2009 forecast. To be sure, the Institute had excluded a relapse into a further recession and in comparison to the by far more pessimistic forecast of the Institutes of October 2009 had increased the growth forecast for the German economy by 0.5 percentage points to 1.7%. The Institute did not anticipate, however, such a broad-based economic recovery that ended in a strong upswing.

Suggested Citation

  • Wolfgang Nierhaus, 2011. "Economic activity in 2010: Forecasts and reality," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(02), pages 22-25, February.
    • Handle: RePEc:ces:ifosdt:v:64:y:2011:i:02:p:22-25
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    References listed on IDEAS

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    1. Klaus Abberger & Wolfgang Nierhaus, 2010. "Markov-Switching and the Ifo Business Climate: the Ifo Business Cycle Traffic Lights," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2010(2), pages 1-13.
    2. Kai Carstensen & Wolfgang Nierhaus & Oliver Hülsewig & Klaus Abberger & Teresa Buchen & Christian Breuer & Steffen Elstner & Steffen Henzel & Nikolay Hristov & Michael Kleemann & Johannes Mayr & Wolfg, 2009. "Ifo Economic Forecast 2010 - The Lacklustre German Economy," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(24), pages 17-64, December.
    3. Chatfield, Chris, 1993. "Calculating Interval Forecasts: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(2), pages 143-144, April.
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    5. Chatfield, Chris, 1993. "Calculating Interval Forecasts," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(2), pages 121-135, April.
    6. Robert Lehmann & Wolfgang Nierhaus & Magnus Reif, 2016. "A Flash Estimate of Private Consumption in Germany," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(21), pages 36-41, November.
    7. Emile Grunberg & Franco Modigliani, 1954. "The Predictability of Social Events," Journal of Political Economy, University of Chicago Press, vol. 62, pages 465-465.
    8. Wolfgang Nierhaus & Klaus Abberger, 2015. "ifo Konjunkturampel Revisited," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(05), pages 27-32, March.
    9. Kai Carstensen & Steffen Henzel & Johannes Mayr & Klaus Wohlrabe, 2009. "IFOCAST: Methods of the Ifo short-term forecast," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(23), pages 15-28, December.
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    Cited by:

    1. Steffen Henzel & Wolfgang Nierhaus & Timo Wollmershäuser, 2014. "Evaluation der ifo Konjunkturprognosen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(17), pages 43-45, September.
    2. Wolfgang Nierhaus, 2018. "Economic Situation 2017: Forecast and Reality," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(03), pages 35-42, February.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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