Business Cycle 2018: Forecast and Reality

For years, the ifo Institute has critically assessed the quality of its own business cycle analysis, issued in December of each year for the following calendar year. The article discusses the ifo forecast of December 2017 for 2018 against the background of the official outcome of the national accounts published on January 15, 2019. The result: the ifo Institute's forecast for the annual average rate of change in the real gross domestic product in 2018 was evidently too "optimistic". In December 2017 a growth rate of 2.6% had been forecast, whereas the first provisional official GDP estimate for 2018 was 1.5%. The "downwards" global economic forecast risks that were mentioned had partly materialized, and there were also special effects that had a negative impact on the domestic economy. The overestimation of the statistical overhang also contributed to the overestimation of the 2018 annual growth rate.