German economy 2001: Forecast and reality

In retrospect, 2001 was a year of "disappointed economic hopes", the Ifo Institute also having to make several "downward revisions" of its forecasts for the German economy. The false assessment of GDP growth had two causes: economic development for the second semester of 2000 turned out to be worse than it appeared in December 2000, and the robustness of the economy was overestimated. The forecasting error can also be explained by an estimation error in the individual use components of GDP. In general, economic forecasting consists of theory-based "if-then" statements, in which we place the greatest subjective likelihood at the time they are made but whose ultimate accuracy is by no means assured. If key data change constantly, as was the case with regard to world economic activity last year, forecasting errors and forecasting revisions are virtually automatic. The dilemma for the economic forecaster is that in economically turbulent times in which the demand for economic forecasting is especially great, the conditions for accurate forecasting are particularly poor.