Scottish economic growth outperforms expectations in the first quarter of 2017

Scottish GDP grew by 0.8% in the first quarter of 2017, averting recession following a 0.2% contraction in Q4 2016. Scotland’s 0.8% growth compares with 0.2% in the UK as a whole, 0.4% in the United States, and 0.6% in the euro area1.

Scottish GDP, quarter-on-quarter and annual percentage change

The other main points from the government’s latest GDP publication:

  • Scottish GDP per person grew by 0.7% during the first quarter of 2017.
  • In the first quarter of 2017 services in Scotland grew by 0.3% and production grew by 3.1%, while construction contracted by 0.7%.
  • Compared to the same period last year (i.e. 2017Q1 vs 2016Q4), the Scottish economy grew by 0.7%. Equivalent UK growth was 2.0%.

Contribution of industries to Scottish and UK GDP growth, 2017 Q1

The Fraser of Allander Institute (FAI) offered some key reasons for the significant growth in the production sector:

  • Firstly, the figures show a substantial rise of over 7% in metals manufacturing, driven in part by the re-opening of the Dalziel steel plant.
  • Secondly, as our latest Oil and Gas survey highlighted, there has been a growing return to confidence in the oil and gas supply chain. The data published today appears to indicate that this has actually now translated into a welcome degree of bounce-back in actual activity within the sector.
  • Thirdly, the figures report massive growth of over 12% in refined petroleum output which is largely output from Grangemouth. We’d urge caution with this series as it’s especially volatile […]
  • Finally, other sectors of manufacturing have also bounced back from a weak 2016. Food and drink for example, also grew strongly by historical standards.

The FAI on longer-term performance:

[…] [I]f Scotland can — over the remaining three quarters of 2017 — secure its average quarterly growth rate of 0.35% then this will bring in 4Q-on-4Q growth over 2017 of 1.2%. Identical to our June forecast.

  1. Source: Scottish Government Chief Economic Adviser’s June 2017 monthly economic brief.

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