Forecasting World Output: The Rising Importance of Emerging Asia

  • Alessandro Borin
  • Riccardo Cristadoro
  • Roberto Golinelli
  • Giuseppe Parigi


The rapid growth of the emerging markets and of China in particular has changed the economic landscape: emerging Asias share of world trade has grown from about 13% in 1990 to almost 23% in 2008, and its aggregate GDP now accounts for more than 25% of world output, compared with less than 12% in 1990. In this paper we focus on the consequences for the assessment of the global outlook and the specification of forecasting equations. Our main results are that (1) the rise of the emerging countries has led to a sharp change in the correlation of growth rates among main economic areas; (2) this is clearly detectable in forecasting equations too, as a structural break occurring in the 1990s; (3) hence, inferences about global developments based solely on the industrialized countries are highly unreliable; (4) the otherwise cumbersome task of monitoring many and little-known countries can be tackled by resorting to very simple bridge models (BM); (5) BM performance is in line with that of the most widely quoted predictions (WEO, Consensus Forecasts) both before and during the recent crisis; and (6) for some emerging economies, BMs would have provided even better forecasts during the recent crisis.


International Monetary Fund Euro Area Trade Flow Forecast Horizon Asian Economy 
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Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  • Alessandro Borin
    • 1
  • Riccardo Cristadoro
    • 1
  • Roberto Golinelli
    • 2
  • Giuseppe Parigi
    • 1
  1. 1.International Economic Analysis and Relations DepartmentBank of ItalyRomeItaly
  2. 2.Department of EconomicsUniversity of BolognaBolognaItaly

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