institutions and the private sector and found that there is a high degree of collinearity across the forecasts—across international institutions and the private sector, the forecasts made at a given time period for a given country and year tend to be similar.

# III. Data and Empirical Specifications

The main data sources for GDP growth forecasts are the same-year growth forecasts made in January by the IMF’s _World Economic Outlook_ (WEO) and the World Bank’s _Global Economic Prospects_ (GEP).<sup>4</sup> Growth forecasts by these international institutions are widely used by authorities to assess economic prospects, benchmark their own projections, and are also used by private-sector forecasters (Genberg and Martinez, 2014; Genberg, Martinez, and Salemi, 2014; Beaudry and Willems, 2022).<sup>5</sup> In addition, we explore same-year growth forecasts made in April, June and October by the WEO; one-year-ahead and two-year-ahead growth forecasts made in January by the GEP. Supplementary data include same-year growth forecasts made in January by the private sector obtained from Consensus Forecasts (all countries except MENA countries) and Focus Economics (for MENA countries only).<sup>6</sup> For our baseline regression analysis that includes the main covariates, we use a common sample that covers the same set of 126 countries from 2010 to 2020 in the World Bank GEP January Forecasts sample for same-year forecasts and the IMF WEO January Forecasts sample for same-year forecasts. Private sector consensus (average) January Forecasts sample for same-year forecasts have much lower coverage resulting in 56 countries from 2015 to 2020 in the baseline regression with the main covariates.

## III.1.Forecast Errors

Data from the common sample of the IMF’s WEO and the World Bank’s GEP shows that globally, between 2010 and 2020,<sup>7</sup> the average same-year GDP growth forecast error—the difference between forecasted GDP growth and realized GDP growth—is 1.3 percentage points for the January GEP forecasts and 1.5 percentage points for the January WEO forecasts. In other words, on average, GEP’s growth forecasts in January are 1.3 percentage points higher than the realized growth for that year, while WEO’s growth forecast in January is 1.5 percentage points higher. When 2020 is excluded, the global average forecast error is 0.4 of a percentage point for the January GEP forecasts and 0.7 of a percentage point for the January WEO forecasts. The MENA region on average had the largest forecast errors among all global regions between 2010 and 2020 (see Figure 1, Panel A). The MENA region has the largest growth forecast

> 4 For more information on the World Bank’s _Global Economic Prospects_ reports, visit https://www.worldbank.org/en/publication/global-economic-prospects or https://openknowledge.worldbank.org/handle/10986/2140; for more information on the International Monetary Fund’s _World Economic Outlook_ reports, visit https://www.imf.org/en/Publications/WEO.

> 5 Evidence on the importance of WEO forecasts has been summarized in Beaudry and Willems (2022). About 88 percent of country authorities strongly agree with the statement that that they “consider the WEO’s projections to be the benchmark for assessing economic prospects.” Furthermore, 64 percent of country authorities strongly agreed with the statement that they “use WEO forecasts to check the accuracy of [their] own forecasts,” while 75 percent strongly agreed that “WEO forecasts are valuable inputs to the economic policy process in [their] country.” 6 For more information on Consensus Forecasts, visit  https://www.consensuseconomics.com/; for more information on Focus Economics Forecasts, visit https://www.focus-economics.com/regions/middle-east-and-north-africa.

7 The analysis focuses analyses on 2010–2020 because systematic World Bank January GEP forecast data are only available for this period. Note that in the paper, we do not provide trends of the private sector’s forecasts given their limited coverage of countries and years.

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