Accuracy of growth forecasts for transition countries: Assessing ten years of EBRD forecasting

This paper analyses the accuracy of GDP growth forecasts prepared by the EBRD for 25 transition countries between 1994 and 2004. It provides the first comprehensive statistical analysis of output growth forecasts for transition countries in central and eastern Europe and the Commonwealth of Independent States. The analysis finds that EBRD forecasts are mostly unbiased and efficient, that forecast errors are not autocorrelated and do not depend on the value of the forecasted variable. In addition, it shows that forecast accuracy has improved with progress in transition as well as with the expansion in the information domain. The Russian crisis was the only clear unexpected economic shock in the available time series. The EBRD’s forecast accuracy for late within-year GDP forecasts were found to be better by 0.4 percentage points than the forecast accuracy of other institutions.