Remarkable forecasts for GDP growth

Remarkable forecasts for GDP growth

The Dutch economy is recovering and will continue to do so after 2020. However, Rotterdam researcher Professor Philip Hans Franses of Erasmus School of Economics also expects a decline in growth in 2018/2019. So buckle up.

Professor Philip Hans Franses is Professor of Applied Econometrics and Marketing Research at Erasmus University Rotterdam. In 2006 he and his colleague Professor Bert de Groot provided forecasts for the Dutch annual GDP (Gross Domestic Product) growth for 2015. Like everybody else, they missed the 2009 dip. That crisis was a combination of factors nobody had foreseen. But, unlike anybody else, with growth rates of -1.1% and -0.2%, respectively, they did predict the decline in 2012–2013 just right. Therefore, some of their long-term forecasts made good sense. 

Now Franses has a new, remarkable prediction. He says: 'Our forecasts in the 2006 report were based on an error correction model for GDP growth, with the number of employees under contract at Randstad temporary staffing services as an explanatory variable. Motivated by the moderate success of our forecasts in 2006, I updated the data and looked at the same model again. Updating for GDP meant an update due to a different inflation base year. An update of the Randstad data turned out to be a little more cumbersome.

'Based on the model and the new data, I would predict moderate growth up to 2025 with a dip, however, in 2018/2019. So a decline followed by a long period of prosperity. The absolute values of the forecast are not that relevant: it is the pattern that matters. Of course, unforeseen events can change the forecasted path, but with today’s insights, this is what is seems to be.'


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