School of Economics and Finance

September 2015

The table below presents the one year ahead forecasts for quarterly (annualised) GDP growth and CPI inflation estimated using data upto Q2-2015. 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 2.42% in 2015. However, the forecast variance is 0.46% across models.

  • UK Inflation is expected to be 1.73% in 2015. However, the forecast variance is 0.19 across models.

  • In comparison, UK Treasury Independent Consensus Forecasts are 2.6% and 0.4% for UK RGDP and Inflation.

Forecasts for the UK Economy 2015

 

  RGDP Growth Inflation
  Mean Dispersion Mean Dispersion
Autoregr. Moving Average 2.60 [0.9 - 4.3] 2.33 [-2.2 - 7.2]
TVP Factor Augmented VAR 2.70 [1.2 - 4.2] 1.71 [0.2 - 3.3]
Bayesian VAR 2.75 [1.4 - 4.1] 1.74 [-1.7 - 5.2]
Fin. Threshold VAR 2.65 [1.4 - 3.9] 1.62 [-3.1 - 6.3]
Large Bayesian VAR 2.50 [1.2 - 3.8] 1.85 [-1.3 - 5]
Fin. Smooth Transition VAR 2.51 [1.2 - 3.9] 2.49 [-1.1 - 6.1]
Threshold VAR 2.80 [1.5 - 4.1] 1.57 [-2 - 5.2]
Smooth Transition VAR 2.98 [1.6 - 4.3] 1.83 [-2.1 - 5.7]
DSGE 0.39 [-11.8 - 12.4] 1.22 [-4 - 6.4]
TVP VAR 2.66 [1.7 - 3.6] 1.52 [0.4 - 2.6]
Markov Switching VAR 2.64 [1.8 - 3.5] 2.03 [-0.1 - 4.2]
Mixed Frequency VAR 1.68 [-0.2 - 3.5] 0.80 [-2.1 - 3.7]
Unobserved Component SV 2.66 [1.4 - 3.9] 1.82 [0.3 - 3.3]
Average 2.42   1.73  
Highest 2.98   2.49  
Lowest 0.39   0.80  
Variance 0.46   0.19  
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