CEIC Brazil GDP Nowcast
A proprietary dataset designed by CEIC Insights, aimed to anticipate Brazil's GDP growth on a real-time basis.
Explore our weekly updates and analysis, covering Brazil's GDP growth with the support of data, charts and statistics on high-frequency indicators.
CEIC users will be able to access all data series. If you would like to access the full CEIC Brazil Premium Database, including our extended data related to the GDP Nowcast series, you can request a demonstration below.
What is GDP Nowcast?
Why are we nowcasting?
What is the methodology?
The GDP Nowcast methodology is based on a set of selected high-frequency indicators, employed in a dynamic factor model. Dynamic factor models outperform standard univariate models such as random-walk or autoregressive models in estimating GDP. By using this approach, we update our GDP Nowcast, the estimate of GDP growth in the current and the next quarter, every time when new data for any of the high-frequency indicators is available. The model uses a dynamic factor of 1.
How are the high-frequency indicators selected?
For Brazil GDP Nowcast, a total of 23 indicators have been selected, spanning the whole range of the economy such as consumption, prices, external trade, general industry, financial, and a few miscellaneous indicators such as business confidence, and the flow of trucks and light vehicles on highways. All these indicators are published monthly, and they have had a strong correlation with GDP growth historically. Since timeliness is an important aspect of the real-time monitoring of the economy, the maximum data release lag for each indicator is 30 days.
How do we define current and next quarters?
The current quarter means the quarter for which the GDP data is expected to be released by the Brazilian Institute of Geography and Statistics (IBGE), the official source of Brazil's GDP data, while the next quarter refers to the following quarter. The IBGE usually releases the Q1 calendar year GDP data at the beginning of June, Q2 at the beginning of September, Q3 at the beginning of December, and Q4 at the beginning of March of the next year.
Why the GDP Nowcast for the current quarter is not updated in May, August, November, and February?
The current quarter GDP Nowcast is not updated in these months, because all information for that quarter provided by the high-frequency indicators is already available. In May, for example, our current quarter GDP Nowcast refers to Q1 (January-March), because the official GDP data for that period is published at the beginning of June. However, the GDP Nowcast data for the current quarter, in that case, Q1 (January-March), is not updated in May because the new data for the high-frequency indicators released in that month refers to April. On the other hand, the next quarter, Q2 (April-June), data will be continued in May. After the official Q1 GDP data is released at the beginning of June, we will switch our current quarter reference to Q2 (April-June) and next quarter to Q3 (July-September).
Are all components of the GDP Nowcast methodology equally weighted?
Yes, all components used to calculate Brazil GDP Nowcast have equal weights as it has been proven empirically that defining different weights or factors does not improve the model predictive power.
How can an indicator that is growing in annual terms have a negative impact on GDP?
While the movement of individual indicators is suggestive of the direction of the economy, our model interprets the values of these indicators differently, since they are treated as part of the set. Hence, the values could decline, and yet the impact on the GDP be positive, and vice versa.
