The substantial delay in publishing national accounts (namely the Gross Domestic Product, GDP) and thus economic growth (g) in developed and developing countries cripples financiers’ and statesmen’s ability to take critical, timely monetary policy, fiscal policy, and investment -decisions. This market gap is partially corrected with delayed GDP data, knowing that GDP has been the primary macroeconomic measure to assess the health of an economy. However, a modern yardstick known as the Purchasing Managers’ Index (PMI), also emerged as a leading indicator to forecast economic (GDP) growth. Such a finding may improve quantitative assessments of any economy’s health and facilitate the international comparison of related data. Yet, historically, academic scholars have recorded controversial input on how much the GDP measure is representative and accurate in capturing the health of an economy.
This paper aims to tackle the existing data gap in the market as it analyzes the correlation of PMI to economic growth. The study will scrutinize existing literature on the topic and apply the findings on Lebanon’s PMI figures from 2013 to-date. By doing so, the study will derive and calculate Lebanon’s national growth rates and cross-compare them with the existing official statistics and projections for verification purposes.
Scan the sections that interest you most as per the paper’s Outline below:
- The Purchasing Managers’ Index (PMI)
- Literature Review: PMI, a tool to forecast output growth?
- Global PMI Correlations: Reference Level & GDP Growth
- PMI in Lebanon & Economic Growth “g”
For the full PDF report, click below:
The PMI: a Predictive Power for Economic Growth