FAI Comment on today’s GDP figures for Scotland
GDP data released this morning (September 18) confirmed that the Scottish economy shrank in Q2 by -0.3%, but grew by +0.7% over the last year.
Commenting on the data, Professor Graeme Roy from the Fraser of Allander Institute said, "The data today confirm that, like the UK as a whole, the Scottish economy contracted in the second quarter of 2019.
"Economic activity has proven particularly volatile this year as Brexit uncertainty has affected the pattern of business activity.
"In the first three months of the year we saw activity boosted by firms stockpiling supplies in the event that the UK exited the EU at the end of March. When this did not come to pass, and the next deadline was pushed to October 2019, we saw firms run down these stockpiles leading to lower levels of activity.
"This was most clearly evident in activity in the production sectors of the economy. We saw this in the UK wide data, and we see this in the data released this morning for Scotland. In manufacturing for example, output grew by +2.3% in Q1, only to be followed by a contraction of -2.5% in Q2.
"The early evidence suggests that activity in the UK economy has picked up in recent months. Whilst fragile, this suggests that a technical recession – i.e. two consecutive quarters of falling output – appears unlikely. Of course, all this could change if the Brexit process was to further unravel.
"As always, we urge people to focus on longer term growth rather than individual quarter to quarter fluctuations. Over the last year growth was +0.7%, far from Scotland’s long—term average growth rate, and lagging the UK over the same period where growth was +1.2%."
For further analysis of the GDP data, please visit the FAI blog: https://fraserofallander.org/
Published: 18 September 2019