An accuracy assessment of FPB’s medium-term projections [ Working paper 08-07 - 05/06/2007]

The Federal Planning Bureau has been publishing medium-term macroeconomic projections for the Belgian economy since the beginning of the eighties. In this working paper past projection errors are scrutinised to give users a broad idea of the uncertainties surrounding these projections. The analysis reveals that projections for most of the macro-economic variables show no statistically significant bias with the notable exception of the evolution of exports and labour productivity which was clearly overestimated, while labour force growth was systematically underestimated. Examination of the role played by the main exogenous variables shows the importance of potential export markets in explaining projection errors on GDP and components. However, losses in export market shares were underestimated in most economic outlooks. Concerning the labour force, the origin of the projection error changed over time: attributable almost exclusively to errors in the average participation rate at the beginning of the sample, from 1997 onwards the relative contribution of errors on working-age population increased gradually.