Business

Akshay Garg
SECTION-B
251072

Statistics
End Term Project

Submitted to:
Prof. Praveen
Kumar

Submitted by:
 Acknowledgements

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere
thanks to all of them.
I am highly indebted to Prof. Praveen Kumar for his guidance and constant supervision as
well as for providing necessary information regarding the project & also for his support in
completing the project.
I would like to express my gratitude towards my parents & member of FORE School of
Management for their kind co-operation and encouragement which help me in completion of
this project.
My thanks and appreciations also go to my colleagues and people who have willingly helped
me out with their abilities.

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 Contents

Introduction 1
Methodology 1
Problem Statement 1
Solution 2
Inferences 5

Introduction

Today with the help of the given data we will try to forecast the GDP figures with the help of
time series techniques.

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Time-series data are data gathered on a given characteristic over a period of time at regular
intervals. Time-series forecasting techniques attempt to account for changes overtime by
examining patterns, cycles, or trends, or using information about previous time periods to
predict the outcome for a future time period. Time-series methods include nave methods,
averaging, smoothing, regression trend analysis, and the decomposition of the possible time-
series factors, all of which are discussed in subsequent sections.

Methodology

The data for the required research is collected from tradingeconomics.com. For the purpose
of forecasting the GDP the use of time series techniques is done. For calculating the trend line
the method of least square is done.

Problem Statement

We are given with the GDP of India from 2000 to 2015. Now we have to find the trend in the
GDP figures and calculate the figures according to our trend model. Also we have to forecast
the GDP for the year 2016 and 2020.

Year GDP(in billion USD)

2000 474.7
2001 492.4
2002 522.8
2003 617.6
2004 721.6
2005 834.2
2006 949.1
2007 1238.7
2008 1224.1
2009 1365.4
2010 1708.5
2011 1815.87
2012 1824.96

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 2013 1863.2
2014 2042.44
2015 2073.54
(Source: tradingeconomics.com, world bank)

Solution

Firstly, we will calculate the trend line by using the method of least squares.

Year GDP(in billion USD) X X2 XY Y=197.95+122.07x

Y
200 474.7 1 1 474.7 320.02
0
200 492.4 2 4 984.8 442.10
1
200 522.8 3 9 1568.4 564.17
2
200 617.6 4 16 2470.4 686.24
3
200 721.6 5 25 3608 808.31
4
200 834.2 6 36 5005.2 930.39
5
200 949.1 7 49 6643.7 1052.46
6
200 1238.7 8 64 9909.6 1174.53
7
200 1224.1 9 81 11016.9 1296.61
8
200 1365.4 10 100 13654 1418.68
9
201 1708.5 11 121 18793.5 1540.75
0
201 1815.87 12 144 21790.4 1662.82
1 4
201 1824.96 13 169 23724.4 1784.90
2 8
201 1863.2 14 196 26084.8 1906.97

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 3
201 2042.44 15 225 30636.6 2029.04
4
201 2073.54 16 256 33176.6 2151.11
5 4
TOTAL 19769.11 13 149 209542.
6 6 2

India's GDP
2500

2000 f(x ) = 122.07x + 197.95

R = 0.97
1500

GDP (in billion USD) 1000

500

Year

According to the least square method, the trend line equation will be
Y =+ x

Where = Intercept
= Slope
Now,

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 X


2


2
X

XY n
X Y
=

136 19769.11
209542.2
16

(136)2
1496
16

122.07

Now,

=Y X

Y 122.07 X

n ( )
n

19769.11 136

16 ( )
122.07
16

197.95

So, our required Trend line equation is

Y = 197.95 + 122.07x
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Now, by inserting the given values of x in the equation, we will find out the different values
of Y according to our model.
Now, we have to forecast the GDP values for the year 2016 and 2020
Forecasted value of GDP for 2016
Y =197.95+122.07 x

197.95+122.07 ( 17 )

2273.14

So, the forecasted value of GDP for 2016 is $2273.14 billion.

Forecasted value of GDP for 2020
Y =197.95+122.07 x

197.95+122.07 ( 21 )

2761.42

So, the forecasted value of GDP for 2016 is $2761.42 billion.

Inference

So, with the help of trend line we were able to forecast the GDP of 2016 and 2020. If we
look at the graph we can safely say that our trend line is a good fit in the given data. The
value for coefficient of determination is 0.9743 which suggests that our model is able to
explain 97.43% of the total variation from the original values.

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