Natural gas futures soar Gazprom announces shutdown. What did the nowcasting prior to this announcement indicate?nowcast from Bank of Italy through CEPR, Cascaldi-Garcia et al.and Volosko/OECD.
First, gas prices in Europe.
Source: TradingEconomics accessed 9/6.
While modest relative to previous surges, the announcement resolves some uncertainty about whether the shutdown will last. Any forecast conditioned on reopening will need to be reassessed. (Although a small increase in price could be seen as implying an indefinite shutdown has largely been priced in).
Nowcasting, on the other hand, relies on data already observed before quarterly GDP releases, and more frequently.
figure 1: Above, Eurozone 19 GDP in millions Ch.2010 EUR, quarterly exchange rate (blue line), nowcast as of September 2 (red square). Bottom graph, Euro coin GDP growth rate, quarterly growth percentage (blue line), as of 9/5. CEPR-defined recession dates are shaded in gray. Red dotted line as Russia expands its invasion of Ukraine. resource: Bank of Italy, Cascaldi-Garcia et al.CEPR, and the authors’ calculations.
Note that 9/2’s 3rd quarter imminent forecast is 0.1% q/q growth, while EUR Coin 9/5 reads 0.23% (0.4% and 0.9% annualized), both very close to zero .
figure 2: Weekly trackers for the OECD Eurozone (blue) and OECD (tan), both expressed as a percentage, for the week ended 27 August. Red dotted line as Russia expands its invasion of Ukraine. resource: Volosko/OECD.
The Eurozone’s weekly tracking reading of 1.6 translates into an annual growth rate of 1.6% as of Aug. 27 (2.4 for the OECD as a whole means 2.4%).
IMF discusses assessment of shutdown impact from three working papers here.
