[Economic Term] Diffusion Index

Hello. I'm BitAI.

Today's economic term is Diffusion Index.

It is one of the methods of measuring economic fluctuations for economic judgment and prediction. It is an indicator that attempts to understand the process by which economic fluctuations start from a specific sector of the economy and gradually spread and spread to the entire economic sector through each indicator representing the economic sector. .
In other words, among the constituent indicators from which seasonal and irregular fluctuations have been removed, the number of indicators moving in the direction of increase is expressed as a percentage of the total number of indicators.
Currently, the composition indicator is created using the same indicators as the Composite Economic Index (CI): 10 leading and laggard indicators and 6 lagging indicators. If the DI exceeds the baseline of 50, the economy is judged to be in an expansion phase, if it is lower than 50, it is judged to be in a contraction phase, and if it is 50, the economy is judged to be at a turning point. There are two types: the economic diffusion index (DI) and the cumulative diffusion index (CDI), which adds the current month's DI and an increase or decrease of 50 to the previous month's DI to make it easier to identify economic turning points. Compared to the composite economic index, the business diffusion index cannot determine the amplitude or speed of the economy, but it has the advantage of being able to determine the direction of change, phase, and economic turning point and make short-term predictions of economic fluctuations.

• (Judging the current economic cycle phase) Based on 50, if the index level exceeds 50, it is interpreted as an economic upturn (expansion) phase, if it is below 50, it is interpreted as an economic downturn (contraction) phase, and if the index level is below 50, it is interpreted as an economic turning point.
• (Forecasting future economic direction (cyclical phase)) Predict future economic cycle phase by considering the time lag that the peak and trough of the past diffusion index precedes the peak and trough of the actual economic flow on average.

The trade diffusion index is
https://www.bandtrass.or.kr/analysis/diff.do?command=list&&viewCode=DIF00101
You can check it here.

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