High-Frequency Composite Cycle Indicators for the Ecuadorian Economy: IT-1990: IIIT-2022

Abstract

Currently, there are no cyclical indicators available that predict the behavior of Ecuadorian economic activity in a timely manner, given that the existing information has a time lag of more than 6 months. The objective of this research is to build updated high-frequency cyclical composite indicators in the period 1990 - 2022, through the application of the OECD Composite Leading Indicator System methodology (2012), and a broad set of macroeconomic series. As a result of the research, two composite indicators were obtained, a leading indicator and a coincident indicator. The leading indicator is composed of 6 macroeconomic series, with a correlation degree of 0.76, and an average lead of 3.10 months, while the coincident indicator is composed of 4 macroeconomic series, with a correlation degree of 0, 81 and an average advance of -0.29 months. The main results confirm that Ecuadorian economic activity in approximately three months will enter a phase of deceleration on trend, and an economic contraction is expected in the medium term