KOF Economic Barometer
The KOF Economic Barometer is a composite indicator that provides a reliable reading on the direction of GDP growth for the Swiss economy compared with the same quarter a year earlier. The KOF Economic Barometer is based on a multi-sectoral design with three modules: core GDP, construction, and banking.
The barometer has a complex structure because it bundles over 500 individual indicators in several steps. It is published monthly by the KOF Swiss Economic Institute.
Definition: The KOF Economic Barometer is a composite indicator used to predict the future trajectory of the Swiss economy. It provides reliable economic readings by comparing the GDP growth direction with the same quarter of the previous year. The barometer is published monthly by the Swiss KOF Economic Institute.
Origin: The KOF Economic Barometer was developed by the Swiss KOF Economic Institute, dating back to the 1960s. Over time, the indicator has been refined to include more economic variables and more complex calculation methods to improve its predictive accuracy.
Categories and Characteristics: The KOF Economic Barometer is based on a multi-sector design, including core GDP, construction, and banking modules. It employs a complex structure, bundling over 500 individual indicators in several steps. These indicators cover various aspects such as production, orders, inventories, prices, and employment, providing a comprehensive reflection of economic conditions.
Specific Cases: 1. During the 2008 financial crisis, the KOF Economic Barometer signaled an economic downturn several months in advance, helping policymakers and investors take preemptive measures. 2. At the onset of the COVID-19 pandemic in 2020, the KOF Economic Barometer quickly reflected the sharp decline in economic activity, providing timely economic warnings.
Common Questions: 1. Why does the KOF Economic Barometer sometimes show errors? Economic forecasting inherently involves uncertainty, and the KOF Economic Barometer can also be affected by uncontrollable external factors. 2. How to interpret the readings of the KOF Economic Barometer? Generally, readings above 100 indicate economic expansion, while readings below 100 indicate economic contraction.
