Esade Target reveals 3rd consecutive increase: Spain’s economy outstrips average forecasts again
“Spain’s economic growth in 2025 was once again better than expected,” said Omar Rachedi, Professor of Economics at Esade and co-author of the ‘Esade Target,’ an analysis of the accuracy of the economic, inflation and unemployment forecasts made by entities on the Funcas panel. According to this report, the average GDP forecast for last year was 2.1%, compared to the actual growth of 2.8% finally recorded, “thereby confirming that the Spanish economy once again outperformed general expectations.”
“This outcome is even more significant because the tariffs announced by Trump in the first quarter of 2025 increased international uncertainty and, along with it, the likelihood of a downturn in Spain’s economy rather than an unexpected upturn,” explained Rachedi, who also pointed out that “as economic data were gathered, the average forecast had to be revised upwards several times, and even so, the final figure exceeded expectations once again.” “In that respect, 2025 continues the pattern seen previously in 2023 and 2024: for the third year running, Spain’s economy surprised analysts for the better.”
Economic Target
The figures for 2025 alone reveal that the Center for Economic Forecasting at the Universidad Autónoma de Madrid (CEPREDE-UAM) and the Center for Studies “Economía de Madrid” at the Universidad Rey Juan Carlos (CEEM-URJC) were the entities whose forecasts came closest to actual GDP growth with a deviation of 0.3 percentage points, followed by the Instituto Complutense de Análisis Económico (ICAE-UCM), Universidad Loyola Andalucía and CaixaBank Research, whose forecasts all had a deviation of 0.5. Overall, the variance between the average forecast (2.1%) and actual GDP (2.8%) was 0.7 percentage points, half that of the previous year (1.4) and the same as in 2023.
The Esade Economic Target, which analyzes the deviation over the last three years (2023, 2024, and 2025), revealed that the entity making the most accurate forecasts about economic growth was the Spanish Government, with a deviation of 0.5 percentage points.
Last year the Esade report began to feature the Target Penalized Analysis which measures the mean square error of three-year forecasts and according to which, the entities making the most accurate forecasts in 2023, 2024 and 2025 were the Spanish Government and CEPREDE-UAM, both with a variance of 0.6 percentage points.
General Inflation Target
As regards inflation, CEEM-URJC was the institution that made the most accurate general CPI forecast for 2025, i.e. 2.8%, in other words, 0.1 percentage points above actual inflation. CaixaBank Research and the Complutense Institute of Economic Analysis (ICAE-UCM) came second, both with a deviation of 0.2 percentage points. In this respect, the gap between the average forecast (2.2%) and the actual rate of general inflation (2.7%) is half a percentage point – higher than the 0.3 percentage points of the previous year.
The analysis of the 2025 deviations in conjunction with those of the two previous years, which comprise the Esade Inflation Target, reveal that ICAE–UCM was the entity making the most accurate forecasts between 2023 and 2025, as regards both simple error (0.07 deviation) and the mean square error (0.12).
According to André B.M. Souza, professor of Economics at Esade and also a co-author of Esade Target, “the other side of stronger-than-expected economic performance is that inflation has also been higher than expected.” “However, it’s important to put this figure into perspective: we’re above the European Central Bank’s (ECB) target of 2%, but we’re still quite close to that threshold and are not facing a scenario of runaway inflation,” explained Souza.
Unemployment Target
As regards the unemployment rate forecast for 2025, ICAE-UCM was the only entity to accurately predict the actual unemployment rate of 10.5%. This was followed by CEEM-URJC and Metys, which both forecast 10.6%. Overall, the difference between the average forecast (11%) and the actual unemployment rate (10.5%) was half a percentage point as in the previous year.
In the three-year analysis, the Employment Target, which calculates the simple error generated by entities in 2023, 2024 and 2025, revealed Funcas and Universidad Loyola Andalucía to have made the most accurate forecasts of the actual results, with an average deviation of 0.28 percentage points in both cases. According to the Penalized Target, which measures the mean squared error, Funcas was the most accurate with a deviation of 0.29 points, whilst the Spanish Government forecast 0.33.
In this respect, professor André Souza pointed out that “the overall landscape of Spain’s job market in 2025 was obviously positive and historically significant.” “But,” he explained, “wage costs grew by 3.2% year-on-year. So, after subtracting inflation running at 2.7%, real growth was barely 0.5%.” “This means that the higher rate of employment was not transferred to wage growth at the same pace, i.e. employment has delivered a very favorable surprise, but wages have increased less than the job market itself.”
