School of Economics and Finance

June 2016

The table below presents the one year ahead forecasts for quarterly (annualised) GDP growth and RPI inflation estimated using data upto Q1-2016. The forecasts are an average of the projection for the four quarters of 2016. 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 2017 can be found here.

Key Highlights:

  • UK RGDP is expected to grow by 1.93% in 2016. However, the forecast variance is 0.54 across models.

  • UK Inflation is expected to be 1.27% in 2016. However, the forecast variance is 0.42 across models.

  • In comparison, UK Treasury Independent Consensus Forecasts are 1.9% and 2.2% for UK RGDP and Inflation.

  RGDP Growth Inflation
  Mean Dispersion Mean Dispersion
Autoregr. Moving Average 2.12 [-0.5 - 4.8] 1.43 [-7.7 - 11.3]
TVP Factor Augmented VAR 2.10 [1.3 - 3] 1.64 [0.4 - 2.9]
Bayesian VAR 2.38 [0.3 - 4.5] 1.58 [-5.3 - 8.4]
Fin. Threshold VAR 2.10 [-0.5 - 4.6] 0.46 [-9.3 - 10.2]
Large Bayesian VAR 1.81 [-0.1 - 3.7] 1.78 [-4.7 - 8.3]
Fin. Smooth Transition VAR 1.47 [-0.6 - 3.6] 0.94 [-5.9 - 7.7]
Threshold VAR 2.56 [0.4 - 4.6] 1.01 [-5 - 7]
Smooth Transition VAR 2.66 [0.2 - 5.1] 0.87 [-8.2 - 9.8]
DSGE 0.54 [-22.7 - 23.6] -0.37 [-10.7 - 10.1]
TVP VAR 2.16 [1.7 - 2.7] 1.63 [0.9 - 2.3]
Markov Switching VAR 2.31 [1.5 - 3.1] 2.12 [-2.3 - 6.6]
Mixed Frequency VAR 0.00 [-0.1 - 0.1] 1.59 [-4.2 - 7.4]
Unobserved Component SV 2.07 [1.4 - 2.7] 0.85 [-1.9 - 3.6]
BVAR Common SV 2.30 [1.2 - 3.4] 1.97 [-1.6 - 5.6]
BVAR t Disturbances 2.34 [0.8 - 3.8] 1.63 [-3.4 - 6.6]
Average 1.93   1.27  
Highest 2.66   2.12  
Lowest 0.00   -0.37  
Variance 0.54   0.42  
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