The Oxford Economics Global Industry Model (GIM) is used to forecast over 100 sectors across 67 countries. Gross value added and gross output forecasts are available across all countries and sectors, with capital spending and price data available for the US, Japan, China and the EU-4. Data are classified using the NACE revision 2 sector classification at the 2-digit level, with more detail available in some sub-sectors. Forecasts are updated on a quarterly basis and take into account the latest production data available, as well as changes to the macroeconomic environment and corporate and regulatory developments.
Sector forecasts are driven by aggregate demand from three regional blocs – the Americas, Asia & Pacific, and Europe, Middle East & Africa as well as by national trends. Sector demand from the three blocs is allocated to individual industries using weights based on regional input-input relationships. These relationships – derived from input-output tables – show the share of each industry’s output that is driven by total final expenditure (consumer spending, investment, government spending and exports) and by intermediate demand. The model also takes into account the impacts of changes in competitiveness on an industry’s market share both regionally and domestically.
Estimates for total final expenditure are derived at a regional level using forecasts taken from the Oxford Global Economic Model (GEM). These are weighted together using input-output relationships to derive a regional estimate of final demand for a given sector. At the same time, an estimate for intermediate demand is derived using supply-chain linkages between production sectors. Regional aggregate demand for a given sector is calculated as the sum of final demand plus intermediate demand. Finally, total demand for a given sector is estimated using trade weights between the three aggregate regions.
At the country level, movements in competitiveness, proxied by changes in output prices and the exchange rate, are taken into account, with forecasts from the latter taken from the GEM. Together with total demand at a regional level, this is used to derive a forecast for gross value added in a particular sector. Production in this sector, in turn, feeds back into the regional supply chain.
The input-output structure of the GIM allows for scenario analysis resulting from macro economic developments. The GIM acts as a satellite model to the GEM; macroeconomic outputs taken from a scenario run on the GEM can be used as inputs in the GIM. The GIM in turn gives an impact on each sector, taking into account changes to the macroeconomic environment and to a sectors’ competitiveness.
Gross value-added is used to forecast gross output. Gross output is modelled as a fixed ratio over gross value added. This ratio is a function of energy costs, the share of energy in production and the price elasticity of demand for energy.