The ‘Yin and Yang’ of Ipi Forecasts : Investigating the Influence of the Us and China on the G20 Countries

This study analyses the influence of the US and China, the world manufacturing powerhouses, over the performance of the manufacturing sector of G20 countries from the lens of forecasting. Building upon the Bayesian additive regression tree (BART) with vector autoregression and stochastic volatility augmentations, the study forecasts the IPI (Industrial Production Index) of G20 countries. It checks whether adding US or China data reveals any superior forecast. The findings indicate that the US holds a considerable advantage in enhancing forecast accuracy compared to China, particularly for developed economies. China’s influence is primarily observed in nations with robust trade relationships