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March 2015

The table below presents the one year ahead forecasts for quarterly (annualised) GDP growth and CPI inflation estimated using data upto Q3-2014. 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

Key highlights

  • UK RGDP is expected to grow by 2.72% in 2015. However, the forecast variance is 0.93% across models.
  • UK Inflation is expected to be 1.71 in 2015. However, the forecast variance is 1.22 across models.
  • In comparison, UK Treasury Independent Consensus Forecasts are 2.6% and 0.9% for UK RGDP and Inflation.

  RGDP Growth Inflation
  Mean Dispersion Mean Dispersion
Autoregressive Moving Average 2.27 [-1.1 ; 5.6] 2.8 [-7.9 ; 14.9]
TVP Factor Augmented VAR 2.18 [-1.1 ; 5.4] 2.47 [-1.6 ; 6.4]
Bayesian VAR 2.77 [0 ; 5.5] 2.27 [-5.9 ; 10.4]
Threshold VAR with Credit Spreads 3.82 [1.6 ; 6.1] 0.86 [-6.2 ; 7.9]
Large Bayesian VAR 2.52 [0.1 ; 5] 1.63 [-6 ; 9.4]
Smooth Transition VAR with Credit Spreads 3.87 [1 ; 6.7] 0.49 [-12.1 ; 13]
Threshold VAR 3.2 [0.4 ; 5.9] 1.92 [-5.2 ; 9.1]
Smooth Transition VAR 4.52 [1.7 ; 7.2] -0.11 [-7.9 ; 7.7]
DSGE 0.27 [-24.3 ; 24.9] -0.1 [-12.6 ; 12.5]
TVP VAR 2.39 [1.1 ; 3.7] 1.87 [0.3 ; 3.4]
Markov Switching VAR 2.85 [1.6 ; 4.1] 3.14 [-2.2 ; 8.5]
Mixed Frequency VAR 2.57 [-0.6 ; 5.7] 0.5 [-5.8 ; 6.8]
Unobserved Component SV 2.15 [1.2 ; 3.1] 2.85 [0.1 ; 5.6]
BVAR Common SV 2.74 [1.2 ; 4.3] 2.52 [-1.6 ; 6.7]
BVAR t Disturbances 2.63 [0.6 ; 4.6] 2.49 [-3.4 ; 8.3]
Average 2.72 1.71
Highest 4.52 3.14
Lowest 0.27 -0.11
Variance 0.93 1.22
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
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