Forecasts of the Scottish economy [December 2001]

Our Scottish forecast has been prepared against the background of deteriorating prospects for the global economy (see the World economy section). The UK economy has already slowed down during 2001 with a further slowdown in output growth expected in 2002 (see UK economy section). Scotland's exports are likely to fall due to weaker demand. Multi-national business in the face of a significant downturn is re-assessing plants on a global scale and this is obviously a concern for the Scottish economy. Based on the figures available for the first half of 2001 it is likely that the Scottish economy will have significantly slower growth in 2001 as whole, although 2002 should see an improvement in performance.
We expect that Scottish consumption will weaken very slightly in the remainder of 2001 and in 2002 too, although Government spending remains strong. Our view is that investment expenditure will fall considerably, particularly in 2001 and 2002. We anticipate a significant fall in exports to the rest of the world as the demand for electronic components is falling considerably on a global scale.
Whisky exports are also likely to suffer as incomes fall across the globe.