CROATIA: CEIZ index for April 2015: Positive economic trends continue

In April this year the CEIZ index has registered an increase of 0.16 index points compared to the previous month and 2.6 index points compared to the same month last year. This positive index movement in April this year is the eighth positive monthly index change in a row, which points to the upward movement of economic activity in the last quarter 2014 and first quarter 2015. Furthermore, the increase of index value in April suggests that the boost of the economy continues in the second quarter of this year which implies that the economic activity has hit bottom in the third quarter last year and that GDP growth in the fourth quarter 2014 and first quarter 2015 might be of a more lasting character. If index value changes in the next two months are positive as well, we can expect GDP to also increase in the second quarter 2015. It should be mentioned that the monthly index change registered in April is not really substantial, which is why the upward trend of economic activity is still not sufficient for considerable changes to be felt on the labor market and in investments.

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.

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.

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