CEIZ index for March 2019: 2.6 percent GDP growth rate in the first quarter

May 13, 2019
In March 2019, CEIZ index registered a decrease in value of 0.54 index points when compared to the previous month, and a decrease of 0.32 points when compared to March last year. Such index developments suggest that the economic activity in March 2019 decelerated compared to February, which saw the highest monthly index increase since October 2016. At the same time, the average CEIZ index value in the first three months of this year was 0.41 index points higher compared to the last three months of last year, suggesting that the economic activity in the first quarter of 2019 accelerated compared to the last quarter of 2018, when the annual economic growth amounted to just 2.3 percent. The dynamics of the CEIZ index in the first quarter of 2019 thus indicates that in the first quarter of 2019 real GDP will register an annual growth rate of 2.6 percent, which represents an acceleration compared to the last quarter of 2018. Furthermore, seasonally adjusted values also point to an acceleration of the country’s economic activity and suggest that in the first three months of 2019 GDP increased by 0.9 percent compared to the previous quarter.

What is CEIZ?

Coincident Economic Index of the Institute of Economics, Zagreb (CEIZ) is a monthly composite business cycle indicator developed by the Institute of Economics, Zagreb. Its purpose is to provide timely information on the current business cycle condition. Consequently, the CEIZ index value changes simultaneously with the business cycle, thus indicating the present state of the economy. The CEIZ index was constructed by applying in parallel a dynamic factor model and a Markov switching model. Details on the CEIZ index methodology are described in the paper: Rašić Bakarić, Ivana, Marina Tkalec and Maruška Vizek, 2016, “Constructing a Composite Coincident Indicator for a Post-Transition Country”, Ekonomska istraživanja (Economic Research), 29 (1), pp. 434–445. 

The CEIZ index is useful in three ways. First, it is a single-number business cycle indicator containing information that would otherwise have to be accrued by analyzing a large number of economic series. Second, unlike the GDP series, it provides monthly estimates on the state of the economy, thus providing information on fine changes that took place in a short period of time. Third, the CEIZ index is available one to three months prior to quarterly GDP estimates, meaning that policy-makers and the general public can observe the current state of the economy in a timely manner. 

The index is to be interpreted in such a way that the positive values represent economic growth while the negative ones represent a decreased economic activity.

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