The NBU continues to publish Working Papers prepared by NBU staff and is presenting the results of the study The Use of Business Expectations in Short-Term Forecasting of Economic Activity conducted by NBU Monetary Policy Department researchers Roman Lysenko and NataliaKolesnichenko.
Statistical data on the growth of GDP and its components are usually published with significant delays, creating the need for adequate estimates of the country’s current level of economic activity in order to provide the central bank with understanding of real-time economic developments. As a rule, these data are used to substantiate monetary policy decisions and estimate the economic impacts of prior decisions. Many of the world’s central banks use companies’ business expectations when making such forecasts.
This paper focuses on the predictive capability of business outlook survey results when projecting changes in Ukraine’s real GDP and its components – consumption and investment.
The authors address a number of practical issues, such as a possibility of evaluating Ukraine’s economic activity before official statistical data are released. What is the length of the time horizon that minimizes the forecasting error? Which economic activity indicator has better forecasting properties: the business expectations index calculated by the NBU or the economic activity indicator the authors propose?
The study provides evidence that the results of business outlook surveys can be used in estimating and forecasting the growth rates of real GDP, consumption, and investment. Along with this, the estimation yields the best results when these indicators are estimated in the current quarter.
Previous Working Papers are available on the NBU’s official website in the sections Research and Publications in the similarly named subsectionWorking Papers.