Today (1st December) we release our latest series of nowcasts of the Scottish economy; these are our revised estimate of the growth in 2015 Q3 and our second estimates for 2015 Q4 .
- 2015 Q3 GDP growth in Scotland, at an annualised rate, is nowcast to be 1.43%, the quarterly change is nowcast to be 0.36%
- 2015 Q4 GDP growth in Scotland, at an annualised rate, is nowcast to be 1.59%, the quarterly change is nowcast to be 0.40%
These nowcasts represent a very slight upward revision for 2015 Q3, and a downward revision of our initial nowcasts for Q4 2015.
Scottish economic performance is poor, and has been for some months now. Our nowcasts suggest little reason for optimism in Q4. We noted in our last nowcast post in November that our December nowcasts would be particularly informative, given that they are the first nowcasts which we have produced for 2015 Q4 that have used data relating to 2015 Q4 itself. That these new data have resulted in a weakening of our estimates for growth in Q4 is a cause for some concern. While, as we observed last month, the underlying indicators are supportive of continued, if weak, growth in Scotland through 2015 the current trend is clear and should be a real worry for policymakers.
Prof. Brian Ashcroft in the November 2015 Fraser Economic Commentary summarised the factors helping to boost economic growth in Scotland (low inflation, low interest rates, net immigration, some earnings growth) as well as those factors dragging growth down (further austerity, household debt levels). In addition, he noted the ever-present effect of external demand on the Scottish economy and the factors boosting and hampering growth in external markets. The key thing in external demand, for us, is that growth in the rest of the UK appears to be weakening although is still outperforming growth in Scotland.
If there is any further weakening of growth in the rest of the UK, it is likely that this will have a significant impact on the Scottish economy given that the rest of the UK is the primary destination for exports from Scotland. To the extent that there is some weakness in the rUK economy which is encouraging the Bank of England to maintain a policy of historically low interest rates, this is perhaps helpful to Scotland, but – short of a significant increase in export diversity – growth in rUK is going to continue to be vital to the health of the Scottish economy.
For details of how the data mentioned above, and other “live” data on Scottish economic activity are used to construct our “nowcasts”, see the Methodology page.