March Scottish Nowcast update

Economic forecasting and nowcasting is notoriously difficult – even more so in a period of heightened economic uncertainty.

With the 29th March looming large on the calendar, economic uncertainty at present is extraordinarily high.

With this in mind, we report the latest results from our nowcasting model for Scotland.

Our nowcast for GVA growth in 2018 Q4 is 0.29% which, at an annual rate, is 1.16%

Our nowcast for GVA growth in 2019 Q1 is 0.31% which, at an annual rate, is 1.24%

These estimates are consistent with the economic narrative developing in the UK, but also in Scotland, of businesses continuing to trade in a ‘business as usual’ manner, but holding off on the sorts of investment decisions which might produce growth at or above long-term trend growth.

This is partly reflected in the early measures of activity provided by business survey indicators, which we use in our model. The PMI for January showed activity declining in Scotland (as well as other places like London) in the first month of the year.

Official data on Scottish growth in 2018 Q4 will be released on the 20th of March, for comparison UK growth in Q4 came in at 0.2%, representing weak and below trend growth. Scotland had grown ahead of the UK in the first half of 2018, but data for the summer was much weaker with Scotland lagging the UK once more.

We will have to wait until sometime in June for official estimates of growth in Q1 2019 in Scotland.

Estimates for the whole of the UK will be released in May, and should the UK exit the EU without a deal on 29th March – all eyes will be on the early indicators of activity in the economy to assess the impact.

February nowcasts of the Scottish economy…

Apologies for the late release of this nowcast update.

We held off producing a February nowcast update as we awaited information on Consumer Confidence. However as we reach the halfway point in the month, we must push on without this indicator in the model.

The latest official estimates of GDP growth for Scotland cover 2018 Q3. These estimate growth of 0.2%.

Our model suggests that growth remains weak in Scotland.

Our latest nowcasts is that the Scottish economy grew by a below trend 0.31% (albeit slightly above the UK – which was 0.2%) in Q4 2018. At an annualised rate this is 1.24%.

Growth in 2019 Q1 is expected to be similarly weak with a nowcast estimate of 0.33%, which at an annual rate is 1.31%.

The next month or so will be a critical period for the UK and Scottish economy as we head towards 29th March 2019. Perhaps by the time of our next nowcast in a couple of weeks we will have a clearer idea of the economic landscape post March 29th.

May nowcasts!

We’ve once again run our nowcasting model on the latest data on Scottish economy to provide estimates of current and recent growth in the economy.

Our model produces the following estimates of growth in the Scottish economy:

• Our nowcast for GVA growth in 2018 Q1 is 0.28% which, at an annual rate, is 1.13%

• Our nowcast for GVA growth in 2018 Q2 is 0.32% which, at an annual rate, is 1.29%

These represent our first estimate for growth in 2018 Q2, and an update on our previous estimate for 2018 Q1 – which last month was estimated to be 0.36% (or annualised at 1.43%).

Thus our model has revised down our estimate of growth in the first three months of 2018. With the episode of poor weather which Scotland experienced in this period, key economic indicators may be a little more volatile in Q1 2018.

Nevertheless, recent Retail Sales data shows that the volume and value of retail sales in Scotland grew 0.5% in the first three months of 2018 (this was in contrast to Great Britain where volumes of retail sales were down 0.5% and value of retails sales was flat).

Since our last set of nowcasts, we have also received new official data on the performance of the Scottish economy in the final three months of 2017.

Last month we estimated that growth in 2017 Q4 was 0.32% (which at an annual rate, is 1.28%).

The official estimates of GDP growth from Scottish Government put growth in the final three months of 2017 at 0.31%.

Well done to our model!

Nowcasting estimates for April!

With Scottish GDP data out tomorrow, this blog provides a (very!) quick and brief update on our latest estimates of recent and current Scottish GDP:

  • Our nowcast for GVA growth in 2017Q4  is 0.32% which, at an annual rate, is 1.28%
  • Our nowcast for GVA growth in 2018Q1 is 0.36% which, at an annual rate, is 1.43%

We will see how close our point estimate is to the data for 2017 Q4 released tomorrow.

Meanwhile, for the interested reader, the chart below summarises the first release, latest release, and average nowcast estimate for Scottish GDP since 2014.


We can see that while our model does not generate estimates with the same volatility as the official GVA series, nevertheless, there is a clear consistency to the trend observed in all three series. We can also see that the revisions which take place to the GDP estimates can be substantial (e.g. Q1 2014, or Q2 2016).

Similarly, as the chart below shows, our average nowcast estimate over this same period is very close to the average initial release estimate for Scottish GDP over this period, suggesting that -on average- our model has been reasonably good at estimating changes in Scottish GDP.