Forecasting Accuracy Report, spring 2017

This report examines the accuracy of the Ministry of Finance’s forecast for 2016, produced in autumn 2015, when compared with the actual outcome for the year. In the forecast, which was used as a basis for the 2016 Budget, GDP growth was expected to be 1.3%, whereas the March 2017 data shows that the actual GDP growth was 1.4%.

In autumn 2015, private consumption was forecast to grow by just 0.8% in 2016, but preliminary figures suggest that it nevertheless grew by 2.0%, which was partly attributable to the low inflation rate. Private investment was forecast to increase by 6.4% in 2016, and this proved to be very close to the true picture, as investment actually grew by 6.1%. The deviations from the forecasts concerning foreign trade were significantly above the average. With the fragmentation of global value chains the foreign trade statistics improved significantly in comparison with the preliminary data, which is evident in the scale of the deviations between the forecast and outcome figures.

The acceleration in GDP growth improved employment by more than had been forecast, and the unemployment rate fell to 8.8%, as against the forecast of 9.4%. The inflation forecast for 2016 was 1.1%, whereas the actual rate in the end was 0.4%. The main contributory factors in this were the larger than expected decreases in the prices of crude oil, other raw materials and food.

The financial standing of public sector entities was more robust in both 2015 and 2016 than the September 2015 forecast had predicted. The forecast level of public debt in proportion to GDP for the end of 2016 was 64.3%, while the actual figure was 63.6%.