Forecasting Properties of Indicators for Predicting GDP Growth in Germany

The quality of forecasting GDP growth rates for the current and the coming quarter is crucial for the accuracy of any economic forecast. These short-term forecasts rely on information from economic indicators that are published monthly. For Germany there are a variety of such indicators, but which ones have the best forecasting properties and give the most reliable signals on the current economic situation? This article compares the most common “soft” indicators for Germany in terms of their predictive power for the quarterly growth rate of GDP. In addition, the information advantage of these indicators over the production index is evaluated.