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Economic Viewpoint

Desjardins Leading Index: A Better Tool for Predicting Quebec’s Economic Cycles

September 30, 2020
François Dupuis, Vice-President and Chief Economist
Mathieu D’Anjou, Deputy Chief Economist • Hélène Bégin, Senior Economist

In the past, the Desjardins Leading Index (DLI) was able to accurately anticipate months in advance turning points in Quebec’s economy. The DLI usually helped predict a change of direction in real GDP not only during recessions and recoveries, but also slowdowns. To ensure that the DLI is always exceptionally reliable and the best tool available to predict Quebec’s economic cycles, it has undergone several major updates since its inception in 1990. Overall, an in-depth analysis confirmed that the DLI always met the highest performance criteria. Still, a recent update helped improve the way the new DLI picks up some of the Quebec economy’s structural changes, especially those concerning international trade. Some indicators had become outdated over time and were replaced by new variables that were better at predicting turning points in real GDP. Below is a detailed description of this new version.