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  • Analytický komentár

Are we in a √-shaped or a W-shaped recession?

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    Tóth Peter
1 feb 2021
We apply a new factor model for the estimation of recession probabilities in the euro area and Slovakia. The model is based on standard monthly indicators of real activity. In the case of Slovakia, we also use timely available data on the value of client transactions in the payment system SIPS, which is run by the NBS. The results for the euro area and Slovakia suggest that the probability of a technical recession with a drop of GDP in two consecutive quarters is negligible. In other words, the quarterly growth profile of GDP during the corona crisis will look more like a square root symbol (√) and a W shape is unlikely based on the latest data. Warning: The results of this note do not represent the official forecast of the NBS.