The ESADE Target – an instrument that analyses the accuracy of the economic-growth and unemployment forecasts made by leading institutions over a three-year period – has found that the Bank of Spain and the Economic Forecasting Centre of the Autonomous University of Madrid (CEPREDE) were the only institutions that correctly predicted Spain’s GDP growth in 2018 (2.5%). The next most accurate forecasters were the Spanish Government and the Complutense Institute of Economic Analysis (ICAE), which both predicted 2.6% growth. On average, the institutions’ forecasts of Spanish GDP growth were off by 0.2 percentage points – the lowest average error since 2013

The gap between unemployment predictions and real figures also narrowed this year: the average forecasted unemployment rate (15.3%) was less than one percentage point higher than the real figure for 2018 (14.5%). With forecasts of 14.6% and 14.8%, respectively, the Institute of Economic Studies (IEE) and the Centre for Economic Studies of Madrid at Rey Juan Carlos University (CEEM-URJC) were the institutions that came closest to predicting the real figure.

Economic forecasts: more accurate than in previous years

The Bank of Spain rose eight positions to take the #1 spot, while CEPREDE climbed from the #22 position in 2017 to take second place this year. Santander, Intermoney and Solchaga, Recio & Asociados rose from the bottom of last year’s list to tie for the #8 spot this year. The European Commission, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) were the only institutions that predicted a GDP increase that ended up being lower than the real figure for 2018.

The 2018 ESADE Target, which calculates the average deviation of each institution’s forecasts over the past three years, shows that all of the economic forecasts for 2018 were accurate. The Spanish Government is the institution with the best three-year track record, posting an average error of 0.33%, followed by the ICAE, the IEE and Repsol, each with an average error of 0.40%; these figures are the closest any institution has come to the centre of the ESADE Target since the instrument was introduced in 2009. Even the institutions positioned in the outer rings of the ESADE Target, such as the FMI and the CEEM-URJC, have a three-year average error of less than one percentage point (0.60% and 0.70%, respectively).

Accurate predictions for the eurozone

The average eurozone growth forecast for 2018 was 2%, a full 0.2 percentage points lower than the real GDP growth figure for the region (1.8%). The greater overall accuracy of the eurozone forecasts was due in large part to the performance of BBVA, the IMF and the OECD, which correctly predicted the real growth figure. According to the Eurozone Economic Target, which calculates each institution’s accuracy over the past three years, BBVA – positioned just outside the bull’s-eye – was the most accurate forecaster during this period, followed by the IMF and the OECD.

Employment forecasts remain cautious

In 2018 all of the institutions predicted that unemployment would decrease. Nevertheless, none of the forecasters accurately predicted the Spanish National Statistics Institute’s official unemployment rate, which is based on the Economically Active Population Survey carried out in the last quarter of the year: 14.5%. The average unemployment forecast was 15.3%, 0.8 percentage points higher than the real figure. The forecasts for 2018 were more accurate than in recent years: predictions in 2016 and 2017 were off by an average of 1.8 percentage points. The institutions remained cautious this year in their job growth predictions, making 2018 the fifth year in a row in which employment exceeded the average forecast.  In 2018, the most accurate forecaster was the IEE (16.6%). The runner-up, CEEM-URJC (14.8%), was followed by Intermoney, Bankia and the Spanish Confederation of Employers’ Organisations (CEOE), in a three-way tie at 14.9%.

In the 2018 Employment Target, the institutions whose accuracy has increased over the past three years consolidated their position as reliable forecasters. For example, the CEOE was the institution positioned closest to the bull’s-eye of the Employment Target for the second consecutive year, with an average deviation of 1.09 percentage points, followed by the URJC-CEEM and the Spanish Government, each with an average deviation of 1.12 percentage points. Other institutions have a poorer track record, including the OECD, with an average error of 2.09 percentage points. Meanwhile, the Bank of Spain, Cemex and the European Commission remain on the outer edge of the target.

Employment/GDP elasticity for 2018

This year, the ESADE Target presents the percentage variation for unemployment divided by the percentage variation for GDP for each institution’s forecast – in other words, the elasticity of employment with respect to economic growth. The real elasticity figure in 2018 (0.40) was lower than the average figure predicted by the institutions (0.84). In other words, job growth per percentage point of economic growth was lower than the forecasters expected.