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KEPE Composite Leading Indicator

Published in KEPE INDICES

July 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 April 2020 and following the first indication of a downward adjustment of the preceding period of reference, the CLI recorded a sharp decrease. The observed fall is the second broadest reduction between two consecutive periods, after the one registered in August 2015. The respective development reflects the depth of the shock the Greek economy has suffered due to the Covid-19 pandemic and the restrictive measures implemented for its containment. As expected, with the inclusion of data for April, the course of the CLI now clearly captures the impact of the related health crisis and the lockdown of the majority of activities on future economic activity in the country. Re-estimating the CLI with data for May, during which the gradual lifting of the imposed restrictions had begun, will signal whether the indications for a further worsening of future economic conditions in Greece are amplified or, rather, attenuate.


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