Unemployment Rate and GDP Prediction Using Support Vector
Regression
Ezgi Deniz Ülker
Computer Engineering Department
European University of Lefke
Gemikonagi Mersin 10 Turkey
eulker@eul.edu.tr
ABSTRACT
In this work our aim was to use support vector regression
technique to predict unemployment rate and gross domestic
product (GDP) of the Organization for the Economic Co-
operation and Development (OECD) countries. The original data
for unemployment rate and GDP taken from OECD was tested
with the models generated by support vector regression. The
analysis of using different kernels as well as analysis of using
extended data from four countries in predicting the unemployment
rate and GDP were considered separately. For unemployment rate,
the relative error in average was 2.055% using the radial kernel
and using extended data from four countries. Similarly, for GDP
the relative error in average was 0.503%. It was observed that in
fact support vector regression is a very powerful modelling tool in
using the existing historical data for predicting the values of
interest.
CCS CONCEPTS
• Artificial Intelligence • Supervised Learning by
Regression • Support Vector Machines
KEYWORDS
Support Vector Regression, Kernels, Unemployment Rate, GDP
ACM Reference format:
Ezgi Deniz Ülker and Sadık Ülker. 2019. Unemployment rate and GDP
prediction using Support Vector Regression. In Proceedings of 2019
International Conference on Advanced Information Science and System
(AISS’19). Singapore, 5 pages. https://doi.org/10.1145/3373477.3373494
1 Introduction
In macroeconomics studies it is very important to deduce
beforehand about the unemployment and GDP so that planning of
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https://doi.org/10.1145/3373477.3373494
Sadık Ülker
Electrical and Electronics Engineering Department
European University of Lefke
Gemikonagi Mersin 10 Turkey
sulker@eul.edu.tr
the economies can successfully be accomplished. There are many
factors which affect the economy as a whole which makes
understanding and planning for future economic policies difficult.
Economic environment can be classified as dynamic, non-linear
and highly uncertain. The historical economic data usually tells a
lot about countries economic situation and this in turn can help
about forecasting the future of the economy of the countries. So
the motivation for this work was to use two of the characteristic
economic indicators historical data to see if they can be modelled
successfully.
1.1 Prediction in Unemployment Rate
Prediction of unemployment rate is a very important issue in
determining the economy of a country in addition to for countries
in developing appropriate labor market policies. Montgomery et al.
studied the forecasting unemployment rate in United States using
variety of linear and nonlinear time series models and comparing
them [1]. Moshiri and Brown used artificial neural network
models, namely a backpropagation model and a generalized
regression neural network model to estimate and forecast
unemployment rates in United States, Canada, United Kingdom,
France and Japan [2]. Floros used time series models and
compared them for forecasting UK unemployment rate [3]. Chen
used the nonlinear grey Bernoulli model for forecasting the
unemployment rate of 10 different countries [4]. Xu et al. used
search engine query data in a neural network for forecasting of
unemployment rate [5]. In a similar work, an ontology-based web
mining method was applied for the unemployment rate prediction
using artificial neural networks and support vector regression [6].
In order to measure the unemployment rate in Indonesia,
Levenberg-Marquardt algorithm was used with a neural network
[7].
In this work, support vector regression was used for the
prediction of unemployment rate. The study involved the analysis
of this prediction in various ways. One of the analysis was for
predicting which kernel function works better for this kind of
prediction problems. The other analysis involved observing the
performance for using the prediction of only one set of
independent variables and one with four independent variables. In
the analysis, we used the data from OECD [8]. The
unemployment rates for OECD, Spain, United States, Korea and
Norway were taken and used in the analysis.
AISS’19, November, 2019, Singapore E. Ulker et al.

1.2 Prediction in GDP ways: namely, make a prediction using just the OECD total
unemployment data (unemployment-total), and the second way
Similar to the prediction of unemployment rate, prediction in
make an observation using four different countries data as the
gross domestic product (GDP) is also very difficult task and has
independent variables (unemployment-countries). In Fig. 1 we can
many uncertainties underlying. One of the early works for euro
see the effect of mapping with different kernels on our test data.
area GDP prediction was done by Rünstler and Sedillot in 2003
using monthly data [9]. Later, Angelini et al. repeated a similar
goal but by using regression [10]. Olej and Krupka used Takagi- 9
Sugeno fuzzy interference systems for the prediction of gross 8
domestic product [11]. Sozen and Arcaklioglu used GDP as an

Unemployment Rate (%)

economic indicator to predict net energy consumption in Turkey 7
[12]. Baffigi et al. used bridge models to predict the euro area
6
GDP [13].
OECD Rate
5
SVR-radial
2 Support Vector Regression 4 SVR-linear
SVR-poly
Support vector regression is a special case of support vector 3 SVR-sigm
machines used in regression originally developed by Vapnik et al.
in 1997 [14]. Soon after its introduction, very good comparison 2

2009
2010
2011
2005
2006
2007
2008

results were obtained for support vector regression with general
regression and time-series prediction applications [15]. The basic
idea of support vector regression technique can be thought of
using a set of training data, which using a kernel function can be
mapped into other spaces so that separation of data or regression
can be done properly. The description of the algorithm can be
found in Welling’s research article [16] and a simple tutorial can
be found in Smola and Schölkopf’s work [17]. Xiang-rong et al.
proposed a multi-kernel support vector regression with multiple
kernel learning mechanism in economic forecasting [18]. A
hybrid forecasting model for forecasting currency exchange was
suggested by Lin [19]. In their work, empirical mode
decomposition and least squares support vector regression was
used. Le-an used a least squares proximal support vector
regression to obtain E-commerce credit risk early-warning [20].
2012
2013
2014
2015
2016
2017
2018
Figure 1: Prediction of OECD Unemployment Rate for OECD
countries 2005-2018 (unemployment-total)
As it can be observed the modeling was not very successful for
all the kernels. In fact, only radial kernel indicated some sort of
similarity to the actual data.
Next a study was conducted to observe the difference of using
four different countries unemployment rates (unemployment data
for United States, Norway, Spain and Korea) in predicting the
overall unemployment rate in OECD. In labeling we called this
case ‘unemployment-countries’. The response in this case is
shown in Fig. 2.

9
3 Analysis 8.5
In this work, our aim was to perform analysis using the artificial 8
Unemployment Rate (%)

intelligence technique for the economic problems: prediction of 7.5

unemployment rate and prediction of gross domestic product
7
using OECD data available.
6.5
OECD Rate
3.1 Analysis for Unemployment Rate 6
SVR-radial
In order to predict the unemployment rate for OECD countries, as 5.5 SVR-linear
a first step, yearly data was extracted from OECD between 2005- 5 SVR-poly
2018. This contains 14 data points, as it can seem that only 14 4.5 SVR-sigm
data might be not enough for correct modelling, one of our aims
4
was to see if modelling can occur with few number of data. The
2013
2014
2005
2006
2007
2008
2009
2010
2011
2012

2015
2016
2017
2018

data was extracted between 2005-2018 for OECD countries total,

Korea, Norway, Spain and United States. Total of 14 data points
were considered which twelve of them were used for training and
Figure 2: Prediction of OECD Unemployment Rate for OECD
two for testing. In our model we wanted to make few observations. countries 2005-2018 (unemployment-countries)
One of the observations that we wanted to make was to see the
effect of using different kernels in mapping. The other observation In this case, it can be clearly observed that the addition of the
that we wanted to make was to use prediction in two different four different countries unemployment rates as external
Unemployment Rate and GDP Prediction Using Support Vector
AISS’19, November, 2019, Singapore
Regression

independent data really improved the modelling by support vector

regression predicting the unemployment rates more successfully.
All the kernels, linear, polynomial, sigmoid and radial, gave much
better responses. Table 1 below summarizes the result of the
support vector regression technique with different kernels applied
in two different cases.

Table 1: Use of Different Kernels in Unemployment Rate

Prediction

Average Error Average Error

(Unemployment- (Unemployment-
Total) countries)
Linear Kernel 0.842917 0.234805
Polynomial 0.905968 0.320846
Kernel
Sigmoid Kernel 0.925261 0.329996
Radial Kernel 0.393625 0.140506
Figure 3: Prediction of OECD Countries GDP (14 years) –
When we consider the figures and the average error in GDP-countries
predictions with different kernels we can make few strong
comments about the results. Firstly, as stated previously when In the second analysis, we wanted to see how changing the
four countries data were used as compared to OECD-total number of data points affects the performance of the regression.
unemployment data only, prediction was much better. The second Here we used 24 data points, which correspond to the yearly
observation that we can make, in both of the cases if we rank the OECD countries total GDP between the years 1995-2018. In this
different kernels performance from best to worst, we see that case 21 data points were used for training and 3 data points for
radial kernel worked much better than the others. Second kernel testing. Figure 4 shows the response using only total OECD data
which worked relatively better was linear. Polynomial and in the regression, GDP-total.
sigmoid kernels did not produce very successful regression in this
problem. One of the reason for this was not having many different
data points though we can not say that this was the only reason.

3.2 Analysis for Gross Domestic Product

Similar to the analysis in unemployment rate in OECD countries,
the regression was applied for the prediction of gross domestic
product (GDP) of the OECD countries. In addition to the similar
analysis, an extra analysis was performed in this case: the analysis
for testing the difference in predictions when more input data was
considered. The questions that needed to be answered were: a. the
performance of the regression b. the performance of different
kernels.
First, GDP analysis was performed with a yearly data between
the years 2005-2018. 14 data were used: 12 data for training and 2
for testing. In the analysis, we considered the four countries data
United States, Norway, Spain and Korea to predict the OECD
countries total GDP. Figure 3 shows the OECD countries real
GDP compared with the predicted for four different kernels. Figure 4: Prediction of OECD Countries GDP (24 years) –
As it can be seen in this figure, radial kernel and linear kernel GDP-total.
produced the best prediction and almost all the predicted data
points overlapped with the real OECD total values. Also it was In this case it was observed that radial and linear kernels
noticed that the results produced by sigmoid kernel and produced very good approximation to the real GDP however the
polynomial kernel were satisfactory as well. polynomial and sigmoid kernels produced GDP values which
were not very close.
AISS’19, November, 2019, Singapore E. Ulker et al.

Next the similar analysis was performed but this time using the Table 2: Use of different kernels in GDP prediction
GDP values of the countries: Korea, Norway, Spain and United
States. So we can consider this analysis as a regression problem Average Error Average Error Average
with four independent variables. The result is shown in Figure 5. (14 Points, (24 Points, Error (24
GDP- GDP-total) Points,
60000
countries) GDP-
countries)
Linear 135.475 561.8724 218.7929
50000 Kernel
Polynomial 1879.08 2611.337 2666.232
Kernel
40000 Sigmoid 1574.581 4577.824 4417.613
GDP (24 year)

Kernel
Radial 364.3908 551.3671 190.0276
30000
Kernel
OECD GDP

20000
SVR-radial
4 Conclusions
SVR-linear
In this work various analysis for the application of support vector
10000 SVR-poly regression to some economic indicators (unemployment rate and
GDP) were studied. It was clearly shown that with the support
SVR-sigm
vector regression that was performed even with few data points
0 the actual behavior of the unemployment rate and GDP can be
2005

2017
1995

1997

1999

2001

2003

2007

2009

2011

2013

2015

predicted with radial kernel. Although all the different kernels

Figure 5: Prediction of OECD Countries GDP (24 years) –
GDP-countries
We can see in the figure that again linear and radial kernels
produced excellent predictions in this case. However polynomial
and sigmoid kernels produced predictions which were not really
describing the behavior.
For the overall summary conclusion in GDP predictions, it was
observed that when 14 years or 24 years were considered both
linear and radial kernels produced better predictions. Also similar
observation was observed when 24 years were considered with
using only GDP-total or GDP-countries as well. In either of the
cases radial kernel and linear kernel yielded better predicted
models.
The summary of all results with different kernels for GDP
prediction are shown in Table 2.
For 14 data points linear kernel yielded the better response but
in 24 data points both with one independent variable (GDP-total)
and four independent variables (GDP-countries) radial kernel
yielded the best response. Also it was very clear that, similar to
the previous prediction in unemployment rate, the case with four
countries were used as independent variables, the predicted results
were much better.
were tested, radial kernel outperformed the others.
In terms of relative errors that can be observed with different
studies, we can make the following conclusions: in unemployment
rate prediction with using four countries the average relative error
value for the radial kernel was 2.055% and for unemployment rate
prediction with using only OECD total data the average relative
error value for the radial kernel was 5.76%. Similarly, in GDP
prediction, considering 24 years, with using four different
countries the average relative error value for the radial kernel was
0.503% and for GDP prediction with using only OECD total data
this value was 1.46%.
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