KEPE Composite Leading Indicator

Published in KEPE INDICES

December 2021 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 September 2021, the CLI recorded a decrease, following a prolonged period of successive increases. At present, the respective development is associated with a single observation and may be part of the intermediate variability that often characterizes the CLI. However, it may reflect the interruption of the enhancement of positive expectations and assessments by agents involved in economic activity, offering leading indications for a moderation in growth dynamics in the near future. Such a development may relate to the uncertainty surrounding the overall development of the pandemic. At the same time, it could mirror a number of short- to medium-term economic repercussions of the pandemic resulting from the disruptions of supply chains, alongside the rise in production and transportation costs and the increase in prices. For that reason, it is necessary to re-estimate the CLI, given that the inclusion of new data is expected to demonstrate the continuation or interruption of the observed trends and provide evidence on the course of future domestic economic activity.


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