Dr. Ulrich Stolzenburg

The purpose of the report is to provide a systematic overview of the relevant data related to Big Data and their potential for macroeconomic analysis (in particular business cycle monitoring and forecasting). In this context, both the possibilities and the challenges that may arise due to data availability, data quality, methodological requirements or the manageability of the data will be discussed in detail.

This study aims at investigating the extent and causes of revisions of output gap estimates and at analyzing methodological issues along different phases of the business cycle. Based on this, possibilities for improvement of the European Commission's current estimation approach are elaborated and evaluated.

Embedded in a comprehensive outlook for the world economy, the Joint Economic Forecast („Gemeinschaftsdiagnose“, GD) prepares in-debth analyses and forecasts for the German economy (detailed 2-year horizon and 5-year medium term projections including potential output estimations). These forecasts are input for the projections of the Federal Government in Germany. The forecasting exercise is carried out jointly by a group of economic research institutes. Based on the diagnostic results and taking into account important issues in the public debate on economic issues the institutes also come up with policy recommendations.

Despite to economic headwinds, researchers at the Kiel Institute for the World Economy (IfW) have revised their forecasts only slightly downward for the period leading up to 2017. Individual factors include weakness in China, plunging oil prices, wrangling between EU partners over the refugee crisis, and concerns about the strength of the global economy. The researchers now expect Germany to achieve gross domestic product (GDP) growth of 2 percent in 2016 (previously 2.2 percent) and 2.2 percent in 2017 (2.3 percent). The significant decline in exports over the winter due to weakness in foreign markets is the main reason for this downgrade. Nonetheless, the German economy will continue to perform well. Stefan Kooths, head of the IfW Forecasting Center: “The economic picture is mixed at present. Industry recently suffered a decline on the back of weaker foreign sales, while service providers benefited from continued growth in consumer spending. In fact, the outlook for the consumer sector is now better than at any time since reunification. On the whole, the German economy remains robust in a difficult international climate and continues to be on track for further growth, especially as industrial production also rose sharply again in January.”

German GDP expected to increase by 1.8 percent (2015), 2.1 percent (2016), and 2.3 percent (2017) – Strong consumption growth is driving economic activity – Imports will grow faster than exports – Weakness in emerging markets and China weighs on global growth – GDP in China is expected to slow down, risk of a “hard landing” has risen considerably