KEPE Composite Leading Indicator

Published in KEPE INDICES

May 2020 estimations


The KEPE monthly Composite Leading Indicator (CLI) is constructed based on a dynamic factor model, using six selected monthly economic series assumed to have leading properties (see also Tsouma, E. [2016], Constructing a Composite Leading Indicator of Economic Activity in Greece, Applied Economics Quarterly, 62 [2], 85-105). It provides early evidence on the course of and any turns in Greek economic activity, ahead of the developments in major economic aggregates. According to the most recent observation for February 2020, the CLI recorded an increase for the fourteenth consecutive period. Under normal circumstances, the observed prolonged recovery of the CLI would constitute a strong early indication of a future sustained enhancement of the stabilizing and improving trends in economic activity in the country. However, in the current juncture of the coronavirus pandemic, during which the Greek economy has been undergoing a sudden shock since March 2020, the recorded course of the CLI is expected to be reversed next month. It should be borne in mind that the present estimation of the CLI incorporates monthly data up to February 2020, which in no way reflect any dimension of the referred disturbance. The economic effects of the lockdown of the majority of activities in the country are expected to impact the course of the indicator starting with the incorporation of data for March 2020.


Notes: The lag in the data is associated with the non-availability of more recent data for building activity.