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Predicting the German Economy: Headline Survey Indices Under Test

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  • Robert Lehmann

    (ifo Institute Munich and CESifo)

  • Magnus Reif

    (ifo Institute Munich and CESifo)

Abstract

This analysis investigates the predictive power of the headline indices of the four most important German survey providers. We conduct an out-of-sample, real-time forecast experiment for growth of total and private sector gross domestic product and growth of gross value added in both the manufacturing and the service sector. All providers publish valuable leading indicators for both GDP measures, with some advantages for the ifo indicators and the Economic Sentiment Indicator, respectively. For the manufacturing sector, indicators provided by the ifo Institute are clearly superior. For the service sector, all indicators prove to have a similar nowcasting performance, whereas the Economic Sentiment Services of the Centre for European Research is preferable for one quarter-ahead predictions.

Suggested Citation

  • Robert Lehmann & Magnus Reif, 2021. "Predicting the German Economy: Headline Survey Indices Under Test," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 17(2), pages 215-232, November.
    • Handle: RePEc:spr:jbuscr:v:17:y:2021:i:2:d:10.1007_s41549-021-00055-5
    DOI: 10.1007/s41549-021-00055-5
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    Cited by:

    1. Robert Lehmann & Sascha Möhrle, 2022. "Forecasting Regional Industrial Production with High-Frequency Electricity Consumption Data," CESifo Working Paper Series 9917, CESifo.
    2. Lehmann, Robert & Wikman, Ida, 2022. "Quarterly GDP Estimates for the German States," MPRA Paper 112642, University Library of Munich, Germany.
    3. Robert Lehmann, 2023. "The Forecasting Power of the ifo Business Survey," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 19(1), pages 43-94, March.

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    More about this item

    Keywords

    Forecasting; ifo business climate; PMI; ESI; ZEW economic sentiment;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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