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476 - The accuracy of the European Commission's forecasts re-examined - Laura Gonzalez Cabanillas and Alessio Terzi

Author(s): Laura Gonzalez Cabanillas and Alessio Terzi, European Commission

The accuracy of the European Commission's forecasts re-examinedpdf(836 kB) Choose translations of the previous link 

Summary for non-specialistspdf(20 kB) Choose translations of the previous link 

This paper analyses the Commission's forecast track record, by building on previous analyses. The extension of the observation period to 2011 allows a first analysis of forecast accuracy during the years of the economic and financial crisis. Over the full timespan, forecasts for the EU and euro area are found to be generally unbiased. The same holds true for the outlook for most Member States, largely confirming earlier results. Moreover, the Commission services track record appears generally in line with that of the OECD, IMF and Consensus Economics, and in some cases better. Finally, while the analysis points to a limited impact of the crisis on the accuracy of the Commission's current-year forecasts, a significant deterioration of the accuracy of year-ahead projections is found. This applies in particular for the forecasts of GDP, investment, inflation and the government budget balance, due mainly to larger forecast errors in the recession year 2009, which by all standards proved exceptional and unanticipated by institutional and market forecasters.

(European Economy. Economic Papers 476. December 2012. Brussels. PDF. 58pp. Tab. Graph. Ann. Free.)

KC-AI-12-476-EN-N (online)
ISBN 978-92-79-22997-8 (online)
doi: 10.2765/28245 (online)

JEL classification: E17, E27, E37

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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