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ESADE Target

What's the ESADE Target?

What's the ESADE Target?

The ESADE Target has been indicating since 2010 the accuracy of organisations in their annual forecasts of economic growth and jobs in Spain.

An avalanche of economic forecasts is published nationally and internationally, and ESADE Target enables businesses to focus on those that tend to be closest to reality. ESADE Target is not so much a judge of economic forecasts, as it is a notary public, collecting forecasts and publishing a comparison between those forecasts and the actual figures that are subsequently announced. It is based on forecasts compiled by a panel of the Spanish Savings Banks Foundation (FUNCAS).

Some of the most important national and international organisations are included.

Why has ESADE published this study?

Business managers are faced with a multitude of differing forecasts and this complicates their work and decision-making. Which forecasts are the most trustworthy? Which forecasting organisations should be followed?

Every so often, various institutions' forecasts regarding economic growth and unemployment are published in the media.

The large number of forecasts – which do not always coincide with one another and rarely match reality – poses a challenge to decision-makers and executives who rely on these predictions to draw up their budgets and develop strategic plans.

This is the main reason why we decided to create a trustworthy indicator that assesses the reliability of forecasts made by major national and international institutions.

ESADE Target: a "notary", not a "judge" ESADE is less interested in ranking forecasts by accuracy than in understanding the deviation of each institution's forecasts over time.


We start with the economic forecasts published by public and private organisations as compiled by the Forecast Panel of the Spanish Savings Banks Foundation (FUNCAS). For the final calculation of ESADE Target, various questions arise regarding:

1. Calculating deviation

ESADE Target publishes forecast deviations measured in points. The reason for not using percentages, or relative figures, is because if an organisation forecasts a rise of 1% in GDP and the actual figure is 2%, then the error based on the forecast is 50% (or 100% based on actual data). Using a percentage formula produces other problems, since it is not the same forecasting 2% if actual GDP growth is 4%, as forecasting 1% when the actual increase is 2%. Both cases would show the same percentage error, but the impact in the first case is two points, while the impact in the second case is just one point. In addition, percentage deviations offer little information to the manager or entrepreneur – and can be misleading. A deviation of 33% seems very large, but if the GDP growth forecast was 1% and actual growth is 1.33% – then the difference is small.


For these reasons, ESADE publishes deviation in points. If an organisation forecasts 2% and the actual figure is 0.5%, then the deviation is 1.5 points. The same applies if the forecast is below the actual figure. If a forecast is 1.5% and actual figure is 3%, then the deviation is also 1.5 points. Information presented in this way is understandable, offers absolute values, and makes sense to managers and entrepreneurs. Deviations, both positive and negative, are measured by the number of points a forecasting organisation tends to deviate.

2. Comparison between the different organisations

Another advantage of working with direct differences in absolute value is that an evaluation of forecasters is independent of who is on the list. ESADE is not interested so much in producing a ranking, as providing company managers with useful information for assessing the value of a forecast (that is, by how many points does the forecaster tend to deviate). This enables managers to calculate a range within which to place a given forecast.


By working with direct differences in absolute values between forecasts and reality, the calculation is unaffected by the degree of success or error of others, nor by the organisations included in the calculation. For example, if a forecaster registers a one-point deviation, it is useful to know if that organisation is always high or low in its forecasts (or shows no bias). Including this information in the general ESADE Target index would distort the analysis. For this reason, we provide an additional table with deviation calculation data for each forecaster.

3. Time period evaluated by ESADE Target

ESADE Target takes the forecast that each organisation published for the year ahead, and compares it with the actual GDP and employment figures (using for jobs the officially published survey of the working population known as the Encuesta de Población Activa). The difference between forecast and reality is then calculated in absolute points, and the same operation is repeated for the previous two years to produce an average.


Longer and shorter time periods were considered (from one to five years). However, ESADE opted for three years because a one-year horizon would give excessive weight to occasional error or accuracy, and lead to abrupt changes in the index; while a five-year horizon would be too harsh on organisations that make especially accurate one-off forecasts (because their standing would not improve much without a further three-year run of good forecasts).


A three-year horizon enables forecasting organisations to improve their showing relatively quickly, while also requiring enough of a track-record to enable robust conclusions to be made about an organisation’s forecasting ability.

Timeline of analysis

Which forecasts are analysed?

ESADE Target uses economic and job market forecasts published by public and private organisations and compiled in the autumn by a panel of the Spanish Savings Bank Foundation (FUNCAS).

The FUNCAS panel is the result of a survey of forecasters made every two months. To complete the panel, and as a comparison, FUNCAS adds forecasts published prior to September by the Spanish government, the Bank of Spain, and various major international organisations.

The number of organisations included in the panel is sufficiently large, representative, relevant, and comprehensive; and includes international public organisations (European and otherwise), banks, and financial and research services. The FUNCAS panel has been active for many years and has proven itself to be the most up-to-date source for forecasts that are amended monthly, bimonthly, or quarterly (depending on the issuing organisation).

ESADE Target also includes non-FUNCAS forecasts made by relevant Spanish or international publications who have their own research service or expert panel.

Institutions analysed