MANILA, Philippines (UPDATED) – The Department of Finance (DOF) was previously criticized for ranking analysts based on the accuracy of their inflation forecasts. Now, the agency just scored the accuracy of economists’ gross domestic product (GDP) growth projections.

In an email sent to reporters on Friday, February 15, the DOF analyzed the “performance” of 20 economists and analysts from different institutions.

The agency found that from 2016 to 2018, quarterly forecast errors averaged 5.6%, with 13 out of 20 forecasters scoring an average error of more than 5%.

The DOF used the mean absolute percentage error (MAPE) method, which involves computing the average of the absolute percentage errors of analysts from the 1st quarter of 2016 to the 4th quarter of 2018.

“The error is defined as actual or observed value minus the forecasted value, as a percentage of the actual value. The smaller the MAPE, the better the forecasts,” Finance Secretary Karl Chua said. 

Of the 20, forecasts of the Bank of the Philippine Islands economists Jun Neri and Nicholas Mapa topped the list with a MAPE of 3.1 from 2016 to 2018. The lower the MAPE, the better the forecasts. (Mapa, who was with BPI for the most part of the period covered by the DOF performance analysis, has been a senior economist of ING Bank Manila Branch since September 2018.)

BPI is followed by Security Bank’s Angelo Taningco, Ateneo de Manila University professor Alvin Ang, as well as economists of IHS Markit and the Institute for Development and Econometric Analysis.

The DOF said that analysts’ forecasts improved in general.

“For example, the average error in the fourth quarter of 2018 was down to 4.0%, from 10.1% and 5.4% in the second and third quarters, respectively,” Chua said.

The DOF previously ranked economists according to their inflation forecasts and went on to conclude that “faulty forecasting” and the media exasperated inflation.

Economic managers aimed for GDP growth to hit 7% to 8% in 2018.

However, they revised it to 6.5% to 6.9% when the quarterly figures were missing the mark and inflation kept climbing. (READ: How high inflation revealed cracks in governance)

Despite the growth forecast cut, the government still missed the goal, as GDP growth in 2018 hit only 6.2%. – Rappler.com