The findings that better data ecosystems reduce the forecast error (forecast optimism) may have several plausible interpretations, one of which is that forecasters tend to be wildly optimistic when data is scarce, and better data ecosystems serve as a check.

**Table 4. Determinants of GDP Growth Forecast Errors (Forecast Optimism or Pessimism)**

|||**Base Mode**<br>**IMF-**|**l**<br>**Consensus/**|**Wi**|**th Growth Volat**|**ility**<br>**Consensus/**|
|---|---|---|---|---|---|---|
|**Y = Forecast Errors (Forecast Growth minus**<br>**Realized Growth)**|**WB-GEP**<br>**(2010-**<br>**2020)**|**WEO**<br>**(2010-**<br>**2020)**|**Focus**<br>**Economics**<br>**(2015-2020)**|**WB-GEP**<br>**(2010-2020)**|**IMF-WEO**<br>**(2010-2020)**|**Focus**<br>**Economics**<br>**(2015-2020)**|
||**(1)**|**(2)**|**(3)**|**(4)**|**(5)**|**(6)**|
|Log of SCI (lagged)|-3.097***|-3.146***|-1.984|-2.273***|-2.331***|-1.772|
||(1.167)|(1.073)|(1.885)|(0.693)|(0.669)|(1.796)|
|MENA Dummy|1.264**|1.566**|1.088|1.005***|1.310***|1.121|
||(0.598)|(0.618)|(0.825)|(0.359)|(0.356)|(0.770)|
|Growth Volatility (lagged)||||0.350**|0.347**|0.222*|
|||||(0.155)|(0.134)|(0.112)|
|Log of GDP Per Capita (lagged)|0.278|0.240|-0.316|0.114|0.078|-0.386|
||(0.179)|(0.178)|(0.425)|(0.120)|(0.123)|(0.390)|
|Export Commodity Price Shocks (T)|5.708|3.101|-5.812|5.179|2.578|-5.158|
||(3.510)|(4.360)|(9.109)|(3.377)|(4.850)|(9.410)|
|Internal Conflicts Shocks Dummy (T)|0.189|0.067|0.099|-0.133|-0.251|-0.296|
||(0.309)|(0.330)|(0.508)|(0.256)|(0.271)|(0.512)|
|Log of Total Population (lagged)|-0.135***|-0.143**|-0.164|-0.082|-0.091|-0.073|
||(0.049)|(0.059)|(0.116)|(0.058)|(0.063)|(0.108)|
|Boom Dummy =1 if Above Median Growth (lagged)|-0.172|-0.493**|-0.562|-0.166|-0.488**|-0.463|
||(0.206)|(0.192)|(0.347)|(0.212)|(0.188)|(0.320)|
|Constant|14.199***|15.771***|15.044*|10.134***|11.749***|12.587|
||(3.821)|(3.639)|(8.866)|(2.390)|(2.461)|(7.698)|
|Number of observations|1,242|1,242|326|1,242|1,242|326|
|R2|0.387|0.367|0.492|0.429|0.409|0.499|
|Adjusted R2|0.378|0.359|0.472|0.421|0.400|0.478|
|_Number of Countries_|_126_|_126_|_56_|_126_|_126_|_56_|

Source: Authors’ calculations based on the World Bank’s January _Global Economic Prospects_ , the International Monetary Fund’s January _World Economic Outlook_ , January Consensus Forecasts, January Focus Economics Forecasts, the World Bank’s _Statistical Capacity Indicator,_ the World Bank’s _World Development Indicators_ , the Export Commodity Price Shocks data from Gruss and Kebhaji (2019), and the UCDP-PRIO Dataset for Conflict.

Note: Statistical significance level 0.01 - ***; 0.05 - **; 0.1 - *. Robust standard errors clustered at the country level. All regressions include year fixed effects, and the reference year is 2015. Columns (1) and (4) samples refer to same-year World Bank GEP January Forecasts sample from 2010 to 2020, covering 126 countries. This common sample is used to define the columns (2) and (5) samples, for same-year IMF WEO January Forecasts from 2010 to 2020. Columns (3) and (6) samples refer to same-year Consensus January Forecasts and the MENA Region Focus Economics January Forecasts, from 2015 to 2020, covering 56 countries, and are not forced to be a common sample with WB-GEP and IMF-WEO. Log of SCI (lagged) is the one-year lagged log of Statistical Capacity Indicator. Growth Volatility (lagged) is the one-year lagged rolling 10-year standard deviation of realized growth rates. Log of GDP Per Capita (lagged) is the one-year lagged log of GDP per capita in constant 2010 US dollars. Export Commodity Price Shocks (T) is the same-year log change in export commodity prices, it captures the direction of the commodity price shocks. Internal Conflicts Shocks Dummy (T) is the same-year dummy variable for internal conflict country-year pairs – as defined using the UCDP-Prio Dataset. Log of Total Population (lagged) is the one-year lagged log of population and is considered a proxy for the country size. Boom Dummy if Above Median Growth (lagged) is a one-year lagged dummy variable for economic booms if growth is greater than or equal to the previous 10year median growth. Note that the unforeseen shocks taken into account in this regression occurred during the same year of the forecast, after the GDP growth forecasts were published in January.

16