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Outlook and appraisal [December 2001]

Ashcroft, Brian (2001) Outlook and appraisal [December 2001]. Quarterly Economic Commentary, 26 (4). pp. 3-8. ISSN 0306-7866

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The Scottish economy was stronger in the second quarter of the year than expected. Revisions to the GDP data indicate that growth has been weaker in Scotland during recent years than previously believed. This poses a challenge for policy. The economy remains considerably weaker than its UK counterpart but there are signs that we may be over the worst of the cutbacks in electronics. Manufacturing remains in recession, while services continue to exhibit positive but below trend growth. The impact of the September 11th attacks and their aftermath are difficult if not impossible to quantify. A high degree of political and economic uncertainty persists. However, the best judgment on the impact of these events is that the downturn will be more prolonged with the recovery occurring later than previously expected. Prospects depend much on developments in the US and wider world economy. However, the relative buoyancy of the UK economy suggests that Scotland will to some degree be insulated from these wider developments. The insulation will be partial, though, due to the greater openness of the Scottish economy to trade and investment flows.