KEPE’s composite leading indicator of Greek economic activity (CLI-GR)

The monthly Composite Leading Indicator (CLI) of KEPE is constructed on the basis of a dynamic factor model, using selected monthly indicators assumed to have leading properties. It provides early evidence of turns in Greek economic activity ahead of the corresponding turns in aggregate measures. According to the most recent observation for February 2019, the CLI records an increase, following the marginal rise of the preceding period of reference. Against the backdrop of this rising path, the Indicator seems to approach the highest, since the onset of the economic crisis, levels that have been recorded during the more recent period, namely in the months of July and August 2018. Given the frequently recorded intermediate variability of the CLI, the question arises on whether the latest rise just constitutes some intermediate positive evidence or signals that the downward adjusting course, which begun in September 2018, has finally come to an end. If the latter holds, the observed recovery of the CLI could constitute, on the basis of its leading feature, an early indication of a future enhancement of the stabilizing and improving trends in economic activity in the country, at least in the short-run. For a better and more accurate assessment regarding the continuation or interruption of the prevailing trends, it is necessary to re-estimate the CLI with all the available information as soon as new data are published.