The accuracy of the European Commission’s forecasts re-examined

This post was written by Philip Lane

here.

7 Responses to “The accuracy of the European Commission’s forecasts re-examined”

  1. seafóid Says:

    http://www.ft.com/intl/cms/s/0/e7cb6e88-4a18-11e2-a7b1-00144feab49a.html

  2. PR Guy Says:

    I can’t remember…. did the EC forecast these levels of unemployment?

    http://www.telegraph.co.uk/finance/financialcrisis/9793154/Greek-youth-unemployment-edges-toward-60pc.html#

    I see Barroso was telling everyone today that austerity was nothing to do with the EC and Draghi was reminding all and sundry that unemployment was nothing to do with him. So who is responsible then? Did the EC forecast that everyone was going to wash their hands of the unemployment problem. Perhaps they will promise Noonan a nice little earner once he’s finished in the Irish government if he gets up and tells everyone that unemployment is a ‘lifestyle choice’ and that growth is going to take off like a rocket any time now.

  3. Gavin Kostick Says:

    From the paper:

    “An assessment of t+2 forecasts which are added each autumn has not
    been carried out to date, but could be envisaged for the future.”

    “For the current-year forecast, mean errors at Member-State level are mostly small, and roughly as often positive as negative. They are somewhat larger and more often positive for the year-ahead forecast, which could suggest a bias.”

    Also note that the paper only goes as far as 2011.

    Just for the sake of a snap shot, European Economic Forecast, autumn 2010 (interactive map), available here:

    http://ec.europa.eu/economy_finance/eu/forecasts/2010_autumn_forecast_en.htm

    European Economic Forecast, autumn 2010 (interactive map), available here:

    http://ec.europa.eu/economy_finance/eu/forecasts/2012_autumn_forecast_en.htm

    In autumn 2010 Greece GDP forecast for 2012: 1.1%
    In autumn 2012 Greece GDP for same year: -6.0%

    In autumn 2010 Spain GDP forecast for 2012: 1.7%
    In autumn 2012 Spain GDP for same year: -1.4%

    In autumn 2010 Portugal GDP forecast for 2012: 0.8%
    In autumn 2012 Portugal GDP for same year: -3.0%

    In autumn 2010 Ireland GDP forecast for 2012: 1.9%
    In autumn 2012 Ireland GDP for same year: 0.4%

    In autumn 2010 Italy GDP forecast for 2012: 1.4%
    In autumn 2012 Italy GDP for same year: -2.3%

    In autumn 2010 Germany GDP forecast for 2012: 2.0%
    In autumn 2012 Germany GDP for same year: 0.8%

    In autumn 2010 Netherlands GDP forecast for 2012: 1.7%
    In autumn 2012 Netherlands GDP for same year: -0.3%

    In autumn 2010 Belgium GDP forecast for 2012: 2.0%
    In autumn 2012 Belgium GDP for same year: -0.2%

    In autumn 2010 Austria GDP forecast for 2012: 2.1%
    In autumn 2012 Austria GDP for same year: 0.8%

    I’ll stop there. On average growth overestimated by 2.88%. You can see the variations.

  4. Gavin Kostick Says:

    Second link is to ‘autumn 2012′.

  5. Shay Begorrah Says:

    @Gavin Kostick

    Just for the sake of a snap shot, European Economic Forecast, autumn 2010 (interactive map), available here:

    > Horrifying litany of bad economic forecasts removed. >

    Nice work. The European Commission and their sneaking regarders really are <Insert your own expletive > clowns - rather a shame they get to restrict the European economic policy options to ones that are fool approved.

    I would note again how, when highlighting the fact that those austerity crazed commission types are living in a fantasy world, the threads here goes a little quiet. The right does try to keep denying the facts the oxygen of publicity.

    @PR Guy

    I see Barroso was telling everyone today that austerity was nothing to do with the EC and Draghi was reminding all and sundry that unemployment was nothing to do with him.

    I foresaw that, almost.

    Why is there no action on unemployment?

    Germany does not have an unemployment problem, the ECB does not see unemployment as its problem and the European Commission is convinced that unemployment will not be a problem once everybody gets with the neoliberal plan.

    My prize is not being on the right of political spectrum and therefore occasionally being right.

  6. Gavin Kostick Says:

    @ Shay Begorrah

    Here’s a bit more, using the same links.

    I did the following out of genuine curiosity.

    In autumn 2010 the European Commission thought that the average growth for Euro members in 2012 would be 1.97%.

    By 2012 they think it is, on average, -0.79% (final figures in Spring).

    So growth in Euro countries in 2012 is around 2.76% lower than expected (and negative). A catastrophic failing.

    In autumn 2010 the European Commission thought that average growth for EU, but not EZ, countries would be 3.19%.

    By 2012 they think it is, on average 1.01%.

    So growth for non-Euro, EU countries is around 2.18% lower than expected (but positive).

    In both cases they are more than 2% out.

    It is not just poor quality forecasting because then you would expect a scatter-shot result. In all countries - except, er Latvia where growth is 0.8% above forecast - growth has come out below forecast. You can see why Latvia is required for the right, when every other country tells the opposite story.

    But the EZ countries have done notably worse than forecast than the non EZ countries by about 0.58%.

    Grimly, at a glance, the forecasts made in autumn 2012 for 2014 are pretty much the same as the ones made in autumn 2010 for 2012.

    Don’t worry there’s no jam today. There will be jam in two years. Why change policy when the jam is on its way?

  7. Shay Begorrah Says:

    @Gavin Kostick

    It is not just poor quality forecasting because then you would expect a scatter-shot result. In all countries - except, er Latvia where growth is 0.8% above forecast - growth has come out below forecast. You can see why Latvia is required for the right, when every other country tells the opposite story.

    If you are an austerian Latvia’s single data point is the valid one and the results for the other twenty five countries are outliers (Dan O’Brien, take a bow).

    You have to wonder if there is some kind of explanation for the laughably poor macroeconomic forecasting of EU institutions - something like shared class interests and political outlook causing them to deny that contractionary economic policies normally cause the economy to contract?

    No, that is unserious of me - there is no magic positive “government spending factor”. There just has to be some other explanation for the facts stubbornly refusing to conform to the correct theory so far.

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