We noted in our November EFO that National Accounts data are subject to a continuous process of revision and that, over time, the incorporation of new data and improved methodologies have materially changed the profile of GDP growth in the early 1990s. The same applies even to more recent vintages of data.
Chart A shows the range of City, academic and other outside forecasts for real GDP growth in 2010 that were made each month through that year. Not surprisingly, the range of forecasts narrowed as early vintages of quarterly ONS data and more survey data were published. The chart also shows that the OBR’s forecast in June 2010 was in line with the average of outside forecasts at that time, at 1.2 per cent, and that we increased our forecast to 1.8 per cent in November 2010, which at the time was slightly above the average outside forecast.
In January 2011, the ONS published its first outturn estimate for growth in 2010. Thanks to the unexpected 0.5 per cent fall in GDP in the fourth quarter, its initial estimate was just 1.4 per cent, lower than all 36 outside forecasts made at that time. But now, following a series of upward revisions, the current ONS estimate for growth in 2010 is 2.1 per cent – higher than every outside forecast made at the end of 2010 and all but two of those made at the start of 2010.