GDP forecast based on semantic business cycle identification

Release 2017-11-15
    Table: Swiss real gross domestic product with forecast  
Year-to-year growth (%) of Swiss real gross domestic product (GDP)
fitted / forecast
standard error
seco estimates*

Sources: Own calculations, forecast for 2017(3), fitted values otherwise, *seco releases (left: May 31, 2017, right: September 8, 2017).

Sample: 2000 (2) - 2017 (2), Forecast: 2017 (3)

Note: Forecast obtained by best nowcasting model.


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Forecast update. Its second consecutive increase pushes the «KOF surprise indicator» for measuring Swiss economic dynamics to a level last seen when the Swiss Franc was still fixed to the Euro in late 2014. The new level of -0.016 (up from a revised -0.020) in the second quarter indicates a significant acceleration of economic activity in the second half of the year.
Revision notes. This year's summer revision of Swiss GDP has shaken up Switzerlnd's recent economic history quite significantly. In light of the new figures 2015 growth now amounts to a handsome 1.2 percent instead of 0.8 percent as previously thought. The statistical office quotes the inclusion of media brokerage as reasons. Put simply, the sale of 2016 European Football Championship media rights added up to 0.4 percentage points to Swiss value added. This addition comes on top of the transit trade - sponsored increase in Swiss GDP growth announced a year ago.
cont. Swiss GDP now owes transit trade and media brokerage up to almost one percentage point of growth (or decline for that matter). Official figure thus become less and less intellgible to all those interested in the dynamics of privat and public household incomes or of labour markets.
bottom line. While official Swiss GDP data tends to suffer ever more from revisions and interpretation problems, the KOF Surprise Index remains a landmark of reliability and logic. The below picture shows a remarkable divergence of GDP and indicator with the indicator heading north and GDP growth south. Keeping in mind the Surprise Indicator's superior semantic identification it is a pretty safe bet to expect official GDP data to change course very soon.

Special features: «Mankiw's 9th principle» has it that inflation almost always is caused by money growth. In the first few editions of his widely used undergraduate text book he used to refer to the cases of interwar Hungary, Poland, Germany and Austria quoting Thomas Sargent (1982). A careful reading of Sargent's statistics and comments reveals, however, that the causality most likely ran the other way. Details»

    Figure: Business cycle indicator based on semantic identification in comparison to real GDP: Ex-ante forecast properties  


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Standard error of regression*
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  First release
Next release 2018-02-21
    *Standard error of regression refers to baseline model published in the first release.