December Scottish economy nowcasts…

With official estimates of GDP growth in Scotland in Q3 2019 due to be released later this month, we’ve updated our nowcasts for the Scottish economy for Q3 and Q4 2019.

These estimates put growth in Scotland:

  • For 2019 Q3 growth at 0.21% which, at an annual rate, is 0.83%
  • For 2019 Q4 GVA  growth is 0.25% which, at an annual rate, is 0.99%

These estimates represent similar estimates to those released last month – and a continuation of the sustained period of weak growth experienced through much of the past few years.

In the last set of official estimates of growth in Scotland, growth in the year to Q2 was 0.6%, included in this estimate was the contraction in GDP in Q2 itself.

The positive growth estimate for Q3 implies that Scotland will not enter recession in 2019.

Taking our estimates for Q3 and Q4 (above) together with the official estimates for 2019 Q1 and Q2, implies economic growth in Scotland of 0.7% between 2019 Q4 and 2018 Q4, or on a 4 quarter on 4 quarter basis, growth is estimated to be 0.8% in 2019.

November nowcast update…

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.

Nowcast fo 2019 Q3

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%.

Q3 Nowcast update

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.