Forecasters come up trumps but BT in lead

Don't say we didn't warn you. This time last year, our economic survey forecast that Australia would grow more slowly in 2012-13 than the government said.

The panel predicted that unemployment would rise to 5.5 per cent. It forecast that our terms of trade would plunge.

It forecast that the dollar would fall, but the sharemarket would rise. It forecast two of the Reserve Bank's three interest rate cuts.

It wasn't a bad set of forecasts, was it? A big pat on the back for our panel, who had a very good year.

The budget forecast growth in 2012-13 to be 3.25 per cent. Our panel was more conservative, going for 2.9 per cent. On figures published for the first three quarters, that was spot on. Many of our forecasters were very close; it's too early to tell who wins gold.

The panel itself wins the gold medal for forecasting that unemployment would climb to 5.5 per cent by June and that underlying inflation would remain at 2.4 per cent despite the carbon tax.

Andrew Hanlan from Westpac, Burchell Wilson from ACCI and retired Treasury official Des Moore had the best crystal balls on interest rates, tipping three rate cuts in 2012-13.

One thing the panel got wrong was business investment. Most went with the budget forecast that the boom would steam on, with business investment rising 12.5 per cent. But two saw it ending: Andrew Boak of Goldman Sachs, who tipped year-average growth of just 6.9 per cent, and Master Builders Australia economist Peter Jones, who tipped 7.5 per cent. The Goldman Sachs team wins that gold medal, but Jones picks up another for his bullseye tip that housing investment would rise just 0.5 per cent. Just as well he works for the MBA.

The blowout in the budget from small surplus to big deficit took most of our market economists by surprise, but not Tom Kennedy of JP Morgan, who tipped a $15 billion deficit. But he was pipped by university economists Neville Norman (Melbourne) and Jakob Madsen (Monash) who split the gold, forecasting deficits of $18 billion and $20 billion, respectively.

The most stunning forecasting effort, however, came when BT economist and wit Chris Caton sat down to tip the markets. Caton picked the S&P/ASX200 to climb from 4095 to 4750 (it closed at 4803), the S&P500 to rise almost as fast to 1550 (it hit 1606) and the FTSE100 to jump to 6150 (it reached 6215).

Chris, we wish we could afford to pay you, but we trust you made a moolah by backing your own tips. From Fairfax Media, we award you our Palme d'Or as forecaster of the year.