Gauging the Globe: The Bank's Approach to Nowcasting World GDP

Abstract

Global activity is a key driver of UK GDP and a bellwether of prospects. Nowcasting global GDP growth, or predicting outturns ahead of their release, is therefore a key input into the Monetary Policy Committee’s assessment of the UK economic outlook.

The Bank uses a suite of models to assess the momentum in the world economy in real time. A wide range of financial market, survey-based and high-frequency output indicators are used to inform the suite.

The statistical suite of global nowcasting models tends to provide an accurate assessment of global activity growth, and significantly outperformed a simple model that did not benefit from the use of high-frequency data during the financial crisis.