The latest Scottish GDP data for the third quarter of last year show that the recovery of GDP strengthened. GDP grew by 0.7% in the quarter, a little weaker than the UK where GDP growth hit 0.8%, but stronger than growth in the previous two quarters of 0.6% and 0.4%, respectively.
The Scottish economy has now exhibited positive growth for the past 6 quarters, indicating a sustained recovery, if still much weaker than recovery from previous recessions.
The chart below shows where GDP in the Scottish and UK economies now stands in terms of recession and recovery.
GDP is still -0.9% below the pre-recession peak, while UK GDP, where the recession was bigger, is -2.5% below the previous peak.
Over the year to the third quarter - four quarter on four quarter - Scottish GDP has grown by 1.3%. If the recovery continues to strengthen and growth reaches 0.8% in the fourth quarter then growth in 2013 will be 1.9%. This is higher than our current forecast of 1.3% and higher than any other Scottish forecaster - see my last post.
In the latest quarter, growth was fairly evenly spread across key sectors with the production sector growing by 0.6%, manufacturing within it growing by 0.7%, and construction and services growing by 0.7% respectively. The growth of manufacturing might suggest that exports are picking up. But the sector still remains -4.6% below its pre-recession peak.
Compared to the UK, the recovery in construction is much weaker here, agriculture, forestry & fishing is exhibiting much stronger growth here, production is growing a little more strongly and services is a little weaker. The chart below shows the comparison
It now looks likely that Scottish GDP will get back to the level it attained before the recession in the first quarter 2014 - six years after the start of the recession. We, that is the FAI, had previously forecast this milestone would be attained round about the third quarter of 2014, so the recovery has clearly been stronger than we anticipated when we made that forecast in 2012.