The Analysis of Forecasting GDP Growth by Means of Single Indicator Model from Leading Indicators

The examination of Gross Domestic Production behavior and some sectoral and macro variables show that latter convey some useful information as leading indicators for forecasting GDP. So, the past information on these indicators helps to reduce the forecast error of GDP. The objective of this paper is to identify the leading indicators and to compare the ability of those in forecasting short run GDP growth. In this regard, fourteen leading indicators in 8 periods are evaluated. Moreover, the forecasts are compared with the ones with univariate ARMA method based on RMSE criteria. The results show the relative outperformance of forecasts with informal exchange rate, although the quality of leading indicators during different period is changing.