School of Economics and Finance

December 2016

The table below presents the one year ahead forecasts for quarterly (annualised) GDP growth and RPI inflation estimated using data upto Q4-2016. The forecasts are an average of the projection for the four quarters of 2017. 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 2018 can be found here.

Key Highlights:

  • UK RGDP is expected to grow by 3.22% in 2017. However, the forecast variance is 2.20 across models.

  • UK Inflation is expected to be 2.32% in 2017. However, the forecast variance is 0.83 across models.

  • In comparison, UK Treasury Independent Consensus Forecasts are 2.1% and 2.2% for UK RGDP and Inflation.

Forecasts for the UK Economy 2017

  RGDP Growth Inflation
  Mean Dispersion Mean Dispersion
Autoregr. Moving Average 3.33 [0.4 - 6.3] 3.69 [-5.5 - 13.2]
TVP Factor Augmented VAR 3.00 [-1.2 - 7.4] 1.98 [-3.5 - 7.4]
Bayesian VAR 3.74 [1.4 - 6] 2.16 [-4.9 - 9.2]
Fin. Threshold VAR 4.36 [2.3 - 6.4] 2.15 [-4.8 - 9.1]
Large Bayesian VAR 3.38 [1.3 - 5.5] 2.10 [-4.7 - 8.9]
Fin. Smooth Transition VAR 4.50 [2.3 - 6.7] 4.37 [-2.9 - 11.6]
Threshold VAR 3.96 [1.8 - 6.1] 2.38 [-3.7 - 8.4]
Smooth Transition VAR 4.24 [2 - 6.5] 1.44 [-5.4 - 8.2]
DSGE -0.53 [-24.6 - 23.4] 1.07 [-9.8 - 11.9]
TVP VAR 3.33 [1.7 - 5] 1.72 [-0.2 - 3.6]
Markov Switching VAR 3.76 [2.8 - 4.8] 2.86 [-1.8 - 7.4]
Mixed Frequency VAR 0.00 [-0.1 - 0.1] 1.27 [-4.6 - 7.1]
Unobserved Component SV 4.22 [2.6 - 5.8] 3.37 [0 - 6.7]
BVAR Common SV 3.53 [2 - 5.1] 2.05 [-2.3 - 6.5]
BVAR t Disturbances 3.48 [1.9 - 5.1] 2.16 [-3 - 7.1]
Average 3.22   2.32  
Highest 4.50   4.37  
Lowest -0.53   1.07  
Variance 2.20   0.83  
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