We’ve run our nowcasting model for the Scottish economy again this month, and produced estimates for growth in Q3 and Q4 of 2019.
These estimates use all of the data currently available on a range of hard and soft indicators, including business surveys, labour market statistics, etc.
The latest model estimates are:
- growth in 2019 Q3 of 0.19% which, at an annual rate, is 0.75%
- growth in 2019 Q4 of 0.26 which, at an annual rate, is 1.05%
These are the weakest growth estimates that our model has generated for some time – but we would caution that these estimates are affected by the contraction in GDP realised in Q2.
In turn, that contraction came after faster growth in Q1 as firms prepared for a potential Brexit at the end of March.
Firms, particularly in the manufacturing sector built up their inventories in Q1, and with the UK not exiting the EU at the end of March and with Brexit pushed down the road, firms in Q2 unwound these stockpiles leading to lower levels of activity.
Going forward, growth estimates are forecast to continue on a weak trajectory as long as Brexit uncertainty remains. What happens thereafter, remains highly uncertain.
The latest nowcasts from our Scottish nowcasting model cover the 3rd quarter of 2019.
Our model suggest that:
- Growth in Q3 is 0.28% which, at an annual rate, is 1.13%
This growth estimate comes after the release of official estimates of economic growth in 2019 Q2 from the Scottish Government which showed that the Scottish economy contracted by -0.3% in Q2. This was slightly more than the UK as a whole, which contracted by -0.2%.
However the Scottish economy did grow 0.7% relative the the same quarter the year before, albeit again this was weaker than the UK as a whole, which expanded 1.2%.
This post reports a series of nowcasts which have yet been reported on the blog. Official estimates for Q2 have now been released by the Scottish Government showing a contraction of -0.3%.
For Q3 our current estimates are:
- September estimate: Growth in 2019 Q3 (July – September) of 0.30% which, at an annual rate, is 1.21%
- August estimate: growth of 0.30% in 2019 Q3 which, at an annual rate is 1.21%.
Shortly we will produce new estimates incorporating the new Q2 growth data from the Scottish Government.
It is also worth noting that an alternative set of nowcasts is available covering all NUTS1 regions of the UK, also produced by researchers at the Fraser of Allander Institute. These estimates are available at: www.escoe.ac.uk/regionalnowcasting.
This month our nowcasting model has produced the following estimates of economic growth in Scotland in Q1 and Q2 2019:
- GDP growth in 2019 Q1 is estimated to be 0.29% which, at an annual rate, is 1.18%
- GDP growth in 2019 Q2 is estimated to be 0.31% which, at an annual rate, is 1.26%
Later this month (27th June) we will receive official estimates of economic growth for Q1 2019 from the Scottish Government, and we will be able to compare these to our own estimates.
Our latest nowcast suggests that this number will come in around 0.3%, but having dipped very slightly in the latest estimate, perhaps it could surprise on the downside!