engleski

Forecasting the direction of changes in Croatia´s industrial production with ICI and CROLEI

The Industrial Confidence Indicator (ICI) and the Croatian Leading Economic Indicator (CROLEI) can be used to forecast developments in the national economy, especially for the manufacturing industry. Both indicators have predictive properties and there is a stable and highly significant accordance between the indicators and the referent series (volume of industrial production). These indicators are very important tools in manufacturing activity prognostics. The Croatian experience has shown that ICI correctly predicts direction of changes in industrial production with one or two quarters lead (quarterly data) and CROLEI with about six months lead (monthly data). ICI and CROLEI are two leading indicators calculated on different methodological grounds. In spite of the methodological differences, they are mutually highly correlated, and they also correlate with the industrial production. Some results of regression and correlation analysis in Croatia confirm these conclusions. Empirical modifications are conducted to make a comparison of the two indicators. Monthly values of CROLEI are expressed as quarterly data in order to align it with ICI which is based on quarterly surveys.

Business Survey; Industrial Confidence Indicator (ICI); Croatian Leading Economic Indicator (CROLEI); forecasting; regression analysis.

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