Outlook and appraisal [October 2003]

Ashcroft, Brian (2003) Outlook and appraisal [October 2003]. Quarterly Economic Commentary, 28 (3). pp. 3-7. ISSN 0306-7866

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Abstract

The Scottish economy weakened appreciably in the first quarter of this year. Of particular note was the extreme weakness of the service sector, which has helped support the Scottish growth rate through the difficult period since 2000 of global recession in electronics and in related IT industries. Scottish manufacturing remained in recession at the beginning of the year continuing the decline that has persisted for 12 consecutive quarters. UK manufacturing in contrast appears to have arrested its decline even if it has not properly begun the process of recovery. Yet, the balance of later data suggests that the world economy is recovering led by the US and the non- Japanese Asian economies. But the growth performance of the Euro area remains weak. The UK economy after dicing with recession in the first quarter showed clear signs of picking up in the second quarter and subsequent developments have led to expectations that interest rates will have to rise if not at the end of this year then soon after the beginning of the next. Recent Scottish survey data also appear to suggest that growth is returning to the Scottish economy. Against this background we have again slightly revised down our forecast for 2003 with recovery becoming better established in 2004.

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