Jurnal Ekonomi & Studi Pembangunan Volume 19, Nomor 2, Oktober 2018, hlm. 142-151 DOI: 10.18196/jesp.19.2.5005 GROSS REGIONAL DOMESTIC PRODUCT FORECASTS USING TREND ANALYSIS: CASE STUDY OF BANGKA BELITUNG PROVINCE Nurmalita Oktaviana1, Nurisqi Amalia2 Diploma in Applied Economics, Faculty of Economics and Business, Vocational School, Universitas Gadjah Mada Jl. Notonegoro No.1 Bulaksumur, Yogyakarta 55281 1nurmalitaoktaviana98@gmail.com 2nurisqiamalia@gmail.com Correspondence E-mail: nurmalitaoktaviana98@gmail.com Received: May 2018; Accepted: October 2018 Abstract: Gross Regional Domestic Product (GRDP) is one of the important indicators to determine the economic conditions in the region. This study aims to forecast the Gross Regional Domestic Product (GRDP) of the Province of Bangka Belitung Islands which is dominated by tourism sector. This forecasting to be expected to give information to formulate a type of policy action that will be conducted by decision makers based on GRDP data. GRDP data are from the first quarter of 2010 to the fourth quarter of 2017 on the basis of constant prices in 2010. Data sources are obtained from Central Bureau of Statistics (BPS) of the Province of Bangka Belitung Islands. The forecasting method used is the research is trend analysis. The results of the GRDP forecasting of Bangka Belitung Province in the first quarter of 2018 to the fourth quarter of 2022 shows an increasing trend. It can be seen from historical data that shows an increasing trend as evidenced from the graph on linear trends. The increasing trend in GRDP of the Bangka Belitung Islands Province for the next five years is sup- ported by government policies that prioritize the tourism sector. Consequently, by prioritizing the tourism sector, this will increase economic growth and can reduce GRDP dependency on mining sec- tor, especially tin that has been continuously decreased. Keywords : Forecasting; PDRB; Time Series; Trend Analysis JEL Classification: E17, C53, C22 INTRODUCTION The main variable used to determine the economic performance of a region is the level of economic growth over time (Gregory and Stu- art, 1992). The value of Gross Domestic Product (GDP) at constant prices is used to calculate na- tional economic growth (Rahardja and Ma- nurung, 2001). GDP is defined as the value of goods and services produced in an area of the economy for a certain period of time (Abel, An- drew B, and Ben S. Bernake, 2001). An economy experiences growth if the amount of production of goods and services produced increases. A high and sustainable level of economic growth is a condition that is desired by every country and region. High growth rates will improve the welfare and prosperity of society as a whole. This is indicated by an increase in the availabil- ity of employment and income. Gross Regional Domestic Product (GRDP) is one of the im- portant indicators for knowing the economic conditions in a country in a certain period of time. GRDP calculation becomes a very im- portant part in macroeconomic, especially about the economic analysis of a region. The results of this GRDP calculation are used as a basis for measuring economic activity in an economic activity. These GRDP figures are used as mac- Gross Regional Domestic Product Forecasts… (Nurmalita Oktaviana, Nurisqi Amalia) 143 roeconomic indicators, as a basis for evaluating economic performance and formulating various policies. Gross Regional Domestic Product (GRDP) data is one of the important indicators to determine the condition of an area within a certain period, based on current prices and on the basis of constant prices. The movement of GRDP values over time is strongly influenced by political factors and government policies. GRDP data is based on a certain time sequence which is presented on an annual basis (long- term time series). Based on this indicator, it will be obtained an overview of the level of pros- perity of people in a region. The direction of movement of the Gross Regional Domestic Product (GRDP) is one of the government's ingredients in setting eco- nomic targets. One way to know the direction of movement can be done through forecasting. Forecasting is a way of projecting values in the past (known value) into the future. The method uses both mathematical models and subjective estimates. This often causes errors caused by the limitations of human abilities (Makridakis, et al., 1982). Forecasting is carried out to deter- mine the movement of a data in the coming pe- riod as done by Jiang, et al. (2017) forecasting the growth of Gross Domestic Product (GDP) in China by using dynamic predictors and mixed frequency data. Dias, et al. (2015) estimate GDP growth before and after the economic and fi- nancial crisis in Portugal. Portugal's economy was badly hit by the crisis. Forecasting is very important in assessing relative performance during periods of economic crisis. Xu, et al. (2018) forecasting using the GP-U-MIDAS model which results are very useful for policy- makers in the US. In the same country, Modis (2013) states that GDP growth is considered a natural growth process that can be explained by the logistical growth equation. The S-shaped logistics pattern provides a good description and forecast for nominal and real GDP per cap- ita in the US over the past 80 years. Jansen, et al. (2016) conducted a comparison between short- term estimates of 12 statistical models and pro- fessional analysis using a set of monthly indi- cators. The results of these studies contain val- uable information that can be used to improve predictions. Maity and Chatterje (2012) make predictions regarding the estimated growth rate of Indian GDP by using ARIMA. The results of the study indicate that only one period in auto- regressive and moving averages are statistically significant. Furthermore, the absolute value of GDP that is estimated to show an increasing trend and its growth rate each reveals the oppo- site trend in the future. Wabomba, et al. (2016) conducted research related to Kenya's GDP forecasting for the next five years using ARIMA. The results of the estimates in the sample indicate that the relative values and predictions are in the range of 5% and the fore- casting effect of this model is relatively efficient in making Kenya's annual GDP model. In all countries, data forecasting is very helpful for policymakers in determining the direction of their policies (Dovern, 2013). Dovern analyzed the frequency of estimated revisions and the factors that influenced them. The results show that each month on average 40% -50% of the forecasting results revise its estimates. Revision depends on a number of factors, such as pre- dictions, business cycles, or strategic interac- tions between forecast. GDP forecasting analy- sis is also carried out in various studies in Indo- nesia. Satria, et al. (2015) forecast GDP and in- flation in Indonesia. The projection results for the next five years show that 64% of models can explain variables well. Forecasting Gross Regional Domestic Product (GRDP) of the Province of Bangka Be- litung Islands by using the Trend is expected to provide an overview of economic growth and economic performance in the Province of Bangka Belitung Islands. Forecasting results can also be used as a basis for determining the amount of the budget and controlling costs. Forecasting of GDP of Bangka Belitung Prov- ince for 5 years from the first quarter of 2018 to the fourth quarter of 2022 was carried out to support the RPJMD of Bangka Belitung Prov- 144 Jurnal Ekonomi & Studi Pembangunan Vol. 19, No. 2, Oktober 2018: 142-151 ince and to look at strategic issues and govern- ment policies focusing on economic growth. If forecasting is not done on GRDP for the future, the government will have difficulty predicting the possibilities in the future and not being right on target in determining or making policies. This study aims to determine the value or forecasting of Bangka Belitung Province's Gross Regional Domestic Product (GRDP) data for preventing actions related to the type of policy that will be made by the decision maker (deci- sion making). Research with the trend method predicts the GRDP of the Province of Bangka Belitung for the next 5 years, namely the first quarter of 2018 to the fourth quarter of 2022. The results show an increasing trend. This is not in line with research from Utama, et al. (2014). Forecasting the Gross Regional Domestic Pro- duct (PDRB) of Bali Province with the Box-Jen- kins method which shows fluctuating results. This is because quarterly data is quite influ- enced by seasonal factors, such as tourist visits, weather and also the realization and develop- ment budget of the government. The trend is a movement (tendency) up or down in the long run, which is obtained from the average change over time. The average change can increase and can reduce. If the aver- age change increases, it is called a positive trend or trend that has an upward tendency. Con- versely, if the average change is reduced, it is called a negative trend or a trend that has a downward trend. Trend illustrates the progress of time series data over a long period of time and has an ascending or descending tendency. This motion reflects the nature of continuity or a continuous state from time to time over a period of time. Because of the nature of this continuity, the trend is considered a stable movement so that in interpreting it can use a mathematical model. The trend can be either a straight line (regression/linear trend) or not straight (regres- sion/non-linear trend) (Dajan, 1986). The ad- vantage of the trend is that the forecast results are close to the actual value and are very good for long-term data while the weakness of this method is not suitable for short-term data use (Dajan, 1986). RESEARCH METHOD Data The data used in this study are time se- ries. Time series is a series of time will be known whether the events, events, symptoms, and variables observed are developing follow- ing regular patterns of development (Hanke, et al., 2003). The data used is the GRDP data of the Bangka Belitung Islands Province. This data is sourced from the Central Bureau of Statistics of the Province of Bangka Belitung Islands with a time period from the first quarter of 2010 to the fourth quarter of 2017. This type of data is sec- ondary data because the data used is not ob- tained directly by the author. Data Analysis Data analysis is done using the trend method. Trend analysis is a long-term upward or downward trend from the average change over time. The data used is GRDP data in the quarter. The software used to process data is SPSS 20. Software According to Makridakis, et al. (1999) the selection of trend forecasting mo- dels can be done by comparing the coefficient of determination (R2). The coefficient of determi- nation (R2) measures how far the ability of the model in explaining the variation of the de- pendent variable and measuring the accuracy of a regression line applied to a group of research data. In general, the value of R2 can be defined as follows: R2 = ∑ ∑ Where: 𝑡 = time / period Y_t = time series value in the 𝑡 period Ŷ_t = forecast value in the 𝑡 period Ȳ = average time series value. The greater the R2 value, the better the model / exact model obtained, which is about 0.7 to 1. The equation formula in the trend method is as follows: Y = a + bx + e Gross Regional Domestic Product Forecasts… (Nurmalita Oktaviana, Nurisqi Amalia) 145 Where: Y = GRDP a = constant bx = PDRBt-1 e = error RESULTS AND DISCUSSION GRDP of Bangka Belitung Province on the basis of constant prices in 2010 per quarter during the first quarter of 2010 to the fourth quarter of 2017 experienced an increase as pre- sented in Table 1. This shows that the data GRDP Bangka Belitung on a quarterly basis during 2010 - 2017 experienced positive growth. The data above is GRDP data that starts from 2010 in the first quarter and ends in 2017 quarter IV. In this data, it is known that the GRDP of Bangka Belitung Province in the pe- riod of 2010 in the first quarter to 2017 in the fourth quarter has increased, can be seen from the highest GRDP in the fourth quarter of 2017 with a total of 12,672,009.37. Output Results of GRDP data of Bangka Beli- tung Province using SPSS 20 software in figure 2 and figure 2. Table 1. Bangka Belitung Province's Gross Regional Domestic Product Based on Constant Prices in 2010, from Quarter I of 2010 to Quarter IV of 2017 No Year, (quarterly) GRDP (million rupiah) Growth (%) 1 2010.1 8,592,658.23 2 2010.2 8,808,349.94 0.025101861 3 2010.3 9,018,196.28 0.02382357 4 2010.4 9,142,699.72 0.013805803 5 2011.1 9,134,044.11 -0.000946724 6 2011.2 9,478,236.39 0.037682354 7 2011.3 9,716,970.73 0.025187633 8 2011.4 9,684,739.07 -0.003317048 9 2012.1 9,689,450.06 0.000486434 10 2012.2 9,962,560.97 0.02818642 11 2012.3 10,144,330.25 0.018245236 12 2012.4 10,308,564.86 0.016189793 13 2013.1 10,309,220.80 6.36306E-05 14 2013.2 10,508,920.08 0.019370938 15 2013.3 10,628,591.25 0.01138758 16 2013.4 10,744,124.96 0.010870087 17 2014.1 10,756,992.97 0.001197679 18 2014.2 11,017,029.10 0.024173682 19 2014.3 11,136,268.84 0.010823221 20 2014.4 11,249,148.61 0.010136229 21 2015.1 11,197,460.36 -0.004594859 22 2015.2 11,455,280.50 0.023024876 23 2015.3 11,580,681.87 0.010947036 24 2015.4 11,728,881.25 0.01279712 25 2016.1 11,582,514.86 -0.012479143 26 2016.2 11,895,095.64 0.026987298 27 2016.3 12,063,444.17 0.014152768 28 2016.4 12,309,765.99 0.020418864 29 2017.1 12,326,039.26 0.00132198 30 2017.2 12,511,643.00 0.015057857 31 2017.3 12,498,059.28 -0.001085686 32 2017.4 12,672,009.37 0.013918168 Source: Author estimation (2018), data are obtained from BPS Bangka Belitung Province. 146 Jurnal Ekonomi & Studi Pembangunan Vol. 19, No. 2, Oktober 2018: 142-151 Table 2. Summary Output Model Summary R R Square Adjusted R Square Std. The error of the Esti- mate 1 .997a .994 .994 96221.64555 a. Predictors: (Constant). Quarterly Source: Author estimation (2018) Table 3. Coefficients Regression Coefficientsa Model Unstandardized Coefficients Standardized Coefficients T Sig. B Std. Error Beta 1 (Constant) 8648738.545 34832.819 248.293 .000 PDRBt-1 127068.824 1842.259 .997 68.974 .000 a. Dependent Variable: PDRB Source: Author estimation (2018) Based on table 2 above it is known that the R-value of 0.997 which is closed to 1 means that between the independent variable, in this case, the GRDP of the previous year has a close relationship with the dependent variable GRDP. The value of R-Square is 0.994 which means the variation of GRDP can be explained by the time period of the transaction of 0.994 or 99.4% and the remaining 0.6% is explained by other variables outside the model. Linear Trend Method will be used to fore- cast GRDP data in Bangka Belitung Province for the next five years quarterly using SPSS 20. Software Based on the regression coefficient table above it can be seen that the significant value