School of Economics and Finance

December 2015

The table below presents the one year ahead forecasts for quarterly (annualised) GDP growth and RPI inflation estimated using data upto Q3-2015. The forecasts are an average of the projection for the four quarters of 2015. The forecasts are derived using 15 econometric models. 

The aim is to provide a wide ranging statistical outlook for the UK economy that is largely free from conditioning assumptions and judgement. 

Details on the models and forecasts can be found at: http://cremfi.econ.qmul.ac.uk/efp/index.php

Forecast summary and key highlights for 2016 can be found here.

Key Highlights:

  • UK RGDP is expected to grow by 2.4% in 2015. However, the forecast variance is 0.03 across models.
  • UK Inflation is expected to be 1.2% in 2015. However, the forecast variance is 0.02 across models.
  • In comparison, UK Treasury Independent Consensus Forecasts are 2.5% and 1% for UK RGDP and Inflation.

Forecasts for the UK Economy 2015

 

  RGDP Growth Inflation
  Mean Dispersion Mean Dispersion
Autoregr. Moving Average 2.39 [1.6 - 3.1] 1.41 [-0.9 - 3.5]
TVP Factor Augmented VAR 2.46 [2 - 2.9] 1.28 [0.9 - 1.7]
Bayesian VAR 2.46 [1.9 - 3] 1.10 [-0.5 - 2.7]
Fin. Threshold VAR 2.48 [1.9 - 3.1] 1.24 [-0.1 - 2.5]
Large Bayesian VAR 2.37 [1.8 - 2.9] 1.20 [-0.2 - 2.6]
Fin. Smooth Transition VAR 2.39 [1.8 - 3] 1.52 [0 - 3.1]
Threshold VAR 2.55 [1.9 - 3.1] 1.04 [-0.4 - 2.4]
Smooth Transition VAR 2.47 [1.9 - 3.1] 1.12 [-0.7 - 2.9]
DSGE 1.74 [-4.2 - 7.6] 0.90 [-1.4 - 3.1]
TVP VAR 2.46 [2 - 2.9] 1.26 [0.8 - 1.8]
Markov Switching VAR 2.42 [2 - 2.8] 1.27 [0.3 - 2.2]
Mixed Frequency VAR 2.43 [1.5 - 3.4] 1.12 [-0.3 - 2.5]
Unobserved Component SV 2.40 [1.9 - 2.9] 1.09 [0.5 - 1.7]
BVAR Common SV 2.44 [2.1 - 2.7] 1.22 [0.6 - 1.8]
BVAR t Disturbances 2.47 [2 - 2.9] 1.16 [0.1 - 2.3]
Average 2.40   1.20  
Highest 2.55   1.52  
Lowest 1.74   0.90  
Variance 0.03   0.02  
Average: Average of forecasts across Cremfi Forecast. Project Models
Dispersion: 10% - 90% Quantiles of Forecast Distribution. TVP: Time Varying Parameter,
DSGE: Dynamic Stochastic General Equilibrium, VAR: Vector Autoregressive, SV: Stochastic Volatility