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 September 2018, and following five consecutive increases in the CLI, its rising course appears to be interrupted. Despite this decrease, the CLI continues to move around the highest levels for the last decade, as it lies, more specifically, above the level recorded in September 2008, whereby the latter was part of the significant downward course in domestic economic activity of that time. Based on that, and given also its frequently observed intermediate variability characteristic, it does not seem advisable to early conclude that the recent indications –arising from the leading feature of the CLI– in favor of an overall upward course signaling the future improvement in economic conditions in the country and, potentially, reflecting that the Greek economy has, indeed, entered a stabilization and recovery regime, are now reversed. Since the decrease still remains a single observation, any assessment on the continuation or interruption of the favourable trends in domestic economic activity should rely on the future course of the CLI. To that end, it is necessary to conduct new estimations, as soon as new data become available and an overall accurate evaluation of the observed indications and trends will become feasible.