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An Empirical Analysis of Forecast Performance of the GDP Growth in India

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  • Monika Gupta
  • Mohammad Haris Minai

Abstract

This article evaluates the accuracy of a forecast based on the properties of the forecast error. To measure how close the predictions of GDP growth are to the actual outcome in India, we have calculated three measures of forecast accuracy: mean absolute error (MAE), root mean square error (RMSE) and Theil’s U statistic. To evaluate the performance of the forecasts, we have compared them with naive forecast and common rules of thumb, using moving averages (MAs) as rules of thumb. The results are inconclusive regarding biasedness and also inefficient. Further, the forecasts have a high degree of correlation among themselves. The findings of forecast errors suggest that the performance of Reserve Bank of India (RBI) forecasts is favourable compared to other organizations, as well as with respect to the general international standard.

Suggested Citation

  • Monika Gupta & Mohammad Haris Minai, 2019. "An Empirical Analysis of Forecast Performance of the GDP Growth in India," Global Business Review, International Management Institute, vol. 20(2), pages 368-386, April.
    • Handle: RePEc:sae:globus:v:20:y:2019:i:2:p:368-386
    DOI: 10.1177/0972150918825207
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