Economic and employment forecasts by different entities are increasingly accurate, but still less accurate than before the pandemic. The ‘Esade Diana’, an analysis conducted since 2010 of the deviation between the forecasts made by the institutions on the Funcas panel about economic growth, inflation and employment in the previous year and over the previous three years, reveals that the deviations between average forecasts and official figures for 2023 concerning the economy (0.5 percentage points) and employment (1.2) were lower than in 2022 (when the differences were 0.7 and 1.8, respectively), but higher than in 2019, when the variations between average forecasts and actual figures were 0.1 regarding the economy and 0.2 for employment.

According to Omar Rachedi, professor of Economics at Esade and co-author of ‘Esade Diana’, the deviations of the 2023 predictions stem from the fact that “the economy has been far more dynamic than expected; GDP growth was underestimated, and unemployment rates were overestimated.” "This behavior,” went on Rachedi, “was triggered by ‘immaculate disinflation’, a scenario where inflation cools without causing a spike in unemployment. This shows that the European Central Bank is achieving a soft landing, i.e., it is winning the war on inflation whilst minimizing the negative fallout on the real-world economy.” “In fact, as regards employment in Spain, 2023 ended with a record number of persons paying Social Security contributions,” he explained.

“The differences between the average forecasts for GDP, unemployment and inflation in 2023, and the figures actually recorded, were substantially smaller than in previous years, particularly as regards inflation,” said André B. M. Souza, professor of Economics at Esade and co-author of the ‘Esade Diana’, who recalled that “since 2020 we have seen considerable disparities between forecasts and actual figures due to the great uncertainty caused by Covid, the war in Ukraine and the sudden upsurge in inflation.” “This year, there’s been an about-turn in these trends, and the differences we’re now seeing between forecasts and actual data are closer to the deviations seen before the pandemic. Consequently, we can expect the forecasts for 2024 to be more accurate than in recent years,” he ended.

Analysis of economic forecasts

As regards the analysis of just 2023, Universidad Loyola de Andalucía and CaixaBank Research were the entities that most accurately forecast the 2023 year-end increase in gross national product (GDP), with an absolute deviation of 0.1 percentage points. They were followed by the Spanish Government which, with a deviation of 0.2, climbed from 21 to 3 in the historic ranking of accuracy, and the Bank of Spain, the Spanish Chamber of Commerce, ICAE-UCM and the OECD, which all had the same deviation of 0.3 percentage points.

Unlike the economic forecasts for 2022 which predicted a higher GDP than was finally recorded (the forecasts averaged 6.2% compared to the official figure of 5.5%), most of the entities except Universidad Loyola de Andalucía, the Spanish Government and the Bank of Spain, forecast that the 2023 GDP would be lower than the actual figure recorded for that year. As a result, the deviation between the average forecast (2%) was 0.5 percentage points lower than the GDP recorded for Spain’s economy at the end of 2023 (2.5%). The most accurate figure recorded in recent years was that of 2019, when the average forecast was 2.7% compared to the actual figure of 2.5% (a difference of 0.2 percentage points).
    
Then, and as revealed by the Esade Economic Diana which averages the degree of specific accuracy in the last three years (2021, 2022 and 2023), the OECD and Repsol were the institutions that predicted the recent evolution of Spain’s economy most accurately, followed, in this order, by the Bank of Spain, the IMF and Metyis.

Analysis of forecasts of general and core inflation

The institutions whose general inflation forecasts were closest to the actual figure for 2023 (3.7%) were BBVA Research, IEE and Universidad Loyola de Andalucía, each with a deviation of 0.1 points. As for core inflation, Funcas was the only institution to forecast the 2023 year-end rate (3.8%) exactly, followed by Metyis with an absolute deviation of 0.1 percentage points, and BBVA Research and the Spanish Chamber of Commerce, each with a deviation of 0.2. Overall, it must be said that although the difference between the average deviation of general inflation (3.1%, i.e., 0.6 percentage points) was smaller than the forecast for 2022 (4.1 points), it was higher than the figure for core inflation in 2023, when the average forecast tallied with the actual figure.

On the basis of these figures, the Esade Diana for Inflation, which analyzes the average degree of accuracy regarding general inflation in the last three years (2021, 2022 and 2023), ranks CEPREDE-UAM, CaixaBank Research and Universidad Loyola de Andalucía as the entities making the most accurate forecasts of inflation on the basis of the general consumer price index. They are followed by ICAE-UCM, Mapfre Economics (participating in the Esade Diana for the first time), Repsol and Intermoney.

Analysis of employment forecasts

As for the job market, Funcas was once again the only institution to accurately forecast the official unemployment figures published by EPA (Spain’s active population survey) for the fourth quarter of 2023 (11.8%). All the other entities taking part forecast a rate of unemployment higher than the figure finally recorded – to be precise, the deviation between the average forecast (13%) and the unemployment rate at the end of 2023 was 1.2 percentage points – although the forecasts were more accurate than those of the previous year when the deviation was 1.8 points. The accuracy of forecasts by the Government and Universidad Loyola de Andalucía was also noteworthy (a difference of 0.2 percentage points), whilst the deviation of the others was 0.8 points or more. The best unemployment forecast of recent years was recorded in 2019, when the average forecast was 13.8% and the actual figure, 13.7% (a difference of 0.1 point).

The Esade Diana for Employment, which calculates the average accuracy in the last three years (2021, 2022 and 2023), ranks Mapfre Economics (participating in the Diana for the first time) as the entity that forecast the recent evolution of Spain’s job market most accurately, followed by CEPREDE – UAM, the Government and Funcas.