Economic Situation in 2014: Forecast and Reality

For years the Ifo Institute has critically examined the quality of its own economic forecasts. This article discusses the reasons for the differences that emerged between its forecast and reality in 2014. It also looks at the long-term average forecasting quality of Ifo’s work. Over the course of last year key framework conditions changed, which constrained economic activity on balance. In view of the asymmetrically distributed impact of events, nearly all professional forecasters overestimated actual GDP growth for 2014 in autumn 2013.