The EuroCOIN indicator calculated by Banca d’Italia economists and published by the Centre for Economic Policy Research turned negative in October for the first time since September 2009, confirming that the Eurozone economy is contracting in the current quarter, as predicted by an earlier fall in real narrow money.
The indicator is a “real-time, monthly estimate of area-wide GDP growth” based on a wide range of inputs including industrial production, business surveys, stock market and financial data and demand indicators – see here for more. Its in-sample historical performance has been impressive – see chart.
The indicator’s Italian provenance, hopefully, ensures a significant influence on the thinking of incoming ECB President Draghi, thereby enhancing the prospect of needed policy easing at next week’s crucial meeting.
