May nowcasts…

Slightly later than usual, we release the results from our nowcasting model of the Scottish economy.

Our nowcasts show:

  • GVA growth in 2017 Q1 was 0.31% which, at an annual rate, is 1.25%. This is down on our last nowcast.
  • Our first nowcast for GVA growth in 2017 Q2 is 0.34% which, at an annual rate, is 1.43%
It is little surprise that we’re seeing a downward revision to our estimate of 2017 Q1 Scottish GVA growth.

Two obvious (although not exhaustive) reasons for this, firstly the recent release of 2016 Q4 GVA growth estimates for Scotland showed that the economy contracted by 0.2% in the final quarter of last year. Secondly, the UK Q1 GDP growth estimate released last month showed slower growth in the UK than in recent quarters.

Our nowcasting model has tended to track fluctuations in growth reasonably well, while overestimating growth. For instance, our model showed below trend (but still positive growth) for 2016 Q4, and on the official data the economy contracted. Similarly, the model estimating positive growth in Q1 2017. Given this, a further contraction in the economy in Q1 -and thus a technical recession- is clearly a possibility.

We’ll be looking at, and commenting more, on the release of data for 2017 Q1 and Q2 in the coming weeks on the Fraser of Allander Institute blog (