Outlook and appraisal [March 2013]

There was evidence of some genuine growth in the Scottish economy in the third quarter of last year. Also the new GDP methodology and revisions have meant the fit with the UK economy during recession and recovery is closer. The recovery has been a little stronger than the earlier data suggested but still a little weaker than the UK as a whole. But survey evidence suggests a weakening in the final quarter of 2012 and uncertain prospects for 2013. It is quite clear the main components of aggregate demand in the Scottish economy remain weak. Moreover, there is little or no evidence of rebalancing away from household consumption toward investment and net exports. From the latest Scottish National Accounts Project (SNAP) data it is evident the contribution of components of demand to growth between the second and third quarters came almost exclusively from Scottish household consumption and to a small extent from government spending. Net trade and investment made a negative contribution.