KEPE Composite Leading Indicator

Published in KEPE INDICES

August 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 May 2020 and following the abrupt fall of the preceding period of reference, the CLI recorded a sharp decrease once again. In terms of its range, the respective decline approaches the broadest reduction between two consecutive periods, which was recorded during the summer of 2015. This development reflects the duration and depth of the shock the Greek economy has suffered due to the Covid-19 pandemic and the restrictive measures implemented for its containment. The recent course of the CLI captures the adverse impact of the related health crisis and the lockdown of the majority of activities on future economic activity in the country. Despite the gradual lifting of the imposed restrictions, which began in May, the indications for a further worsening of future economic conditions in Greece remain strong. The incorporation of data for June, when the imposed restrictions were lifted further, is expected to offer significant information concerning the persistence or reversal of the observed trends.


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