Most accurate forecasts about growth of Spanish economy in 2021 made by OECD and Repsol research department
The OECD forecast of 5% and the Repsol research department forecast of 5.7% were the most accurate as regards the evolution of Spain’s GDP in 2021, which finally closed at 5.2%. Since 2010, Esade Target has examined the differences between the forecasts made by Funcas panel members about economic growth and employment over the last financial year and the last three years. Unemployment at the end of 2021 was 13.3% and the most accurate forecasts were 14.3% and 15.3% by Mapfre Economics and CEPREDE respectively. In general, economic forecasts spanning the 2021 financial year alone were more accurate (the average forecast was a 7% growth rate compared to the actual rate of 5.2%) than unemployment forecasts which envisaged levels of 17.9% last year compared to the actual rate of 13.3%.
According to Omar Rachedi, professor of EdIconomics at Esade and co-author of Esade Target 2021, “The surprising upturn in employment indicates that the widespread use of furlough schemes and subsidies and funding for companies has been crucial for recovering from the coronavirus crisis without leaving Spain’s job market and economy badly scarred. As a result, recovery has been accompanied by unemployment falling far faster than anticipated and, in fact, much faster than in previous recessions.”
Analysis of economic forecasts
Considering just 2021, the OECD with a forecast of 5% and Repsol with a forecast of 5.7% were the panel members whose forecasts were closest to the actual increase in gross domestic product (GDP) of 5.2% according to Spain’s Quarterly Accounts of December 2021. They were followed by the research departments of Bankia, Cemex and Metyis, and the Institute of Economic Studies, which all forecast growth of 6%, i.e. 0.8 percentage points higher than the actual GDP, and the Bank of Spain and the International Monetary Fund, which forecast 4.1% and 6.3% growth, respectively, i.e. a total deviation of 1.1 absolute percentage points.
The deviation between the average forecast (7%) and the actual increase in Spain’s GDP during 2021 (5.2%) was 1.8 points, far less than in the previous year when the deviation of forecasts reached 13.9 points due to the pandemic but not as much as the record deviation in 2012 of 2.5 percentage points. It has, however, been one of the greatest deviations since then.
The results published in the Esade Target of Economics which calculates the average accuracy over the last three years (2019, 2020 and 2021), ranks the Repsol research department, OECD and Metyis as the entities that forecast the evolution of Spain’s economy most accurately, followed by the research department at Bankia, Cemex, Instituto de Estudios Económicos (IEE) and the International Monetary Fund.
Analysis of employment forecasts
Mapfre Economics, included in this survey for the first time this year, and CEPREDE were the two entities that forecast Spain’s unemployment rate most accurately: 14.3% and 15.3%, respectively compared to 13.3% according to official EPA figures for the fourth quarter of 2021. They are followed by the research departments of Bankia, with a deviation of 2.9 percentage points, and AFI, with a deviation of 3.6. Axesor, Instituto Complutense de Análisis Económico (ICAE), Intermoney and the research departments of Repsol and Santander, all forecast unemployment of 17%, a deviation of 3.7 percentage points.
The deviation between the average forecast (17.9%) and actual unemployment at the close of 2021 (13.3%) was 4.6 points – higher than the previous year (3.3 percentage points) and the highest since the 2012 figure of 5.5 percentage points.
These findings from the Esade Target on Employment, which measures the average accuracy over the last three years (2019, 2020 and 2021), ranks CEPREDE, Bankia’s research department and the Instituto Complutense de Análisis Económico (ICAE) as the institutions that forecast the behavior of Spain’s recent job market most accurately, followed by the research departments of Santander and BBVA.
2021 Elasticity
Esade Target also examined the forecasts made by the entities under study about the number of jobs created per percentage point of economic growth that year, also known as elasticity. In 2021, actual elasticity (0.84) was higher than the average forecast (0.50). In other words, employment increased more per unit of GDP than the entities under study expected.
According to Andre BM Souza, professor of Economics at Esade and co-author of Esade Target 2021, “the rapid recovery of the job market entailed a surprising increase in employment/GDP elasticity. Historically, the elasticity of the Spanish economy is high in times of recession, in other words, when GDP falls, unemployment usually soars and elasticity is low in the early stages of recovery. This means that the job market is usually slower to return to pre-recession levels than GDP.” “Looking ahead, it will be interesting to see whether the implementation of active employment policies combined with the new regulatory framework will manage to stabilize the job market and avoid hysteresis in unemployment levels,” he added.
