Scottish economy resilient despite increased global headwinds

Scotland's growth outlook remains positive for 2015 despite increasing headwinds particularly impacting upon manufacturing and the oil and gas industry, the Scottish government said on Friday.

The growth has been driven primarily by both household expenditure and investment, with households having benefited from lower prices and an improving financial outlook, said Gary Gillespie, Scotland's Chief Economist, in his latest economy report of Scotland.

Construction activity has been supported by a surge in public sector investment through 2015, driving growth strongly in this sector of the economy, said the report.

A more challenging external environment, however, including a more muted global economy and the effect of a sustained fall in oil prices, has led to a slowdown in growth as reflected in the most recent quarterly and annualized Gross Domestic Product (GDP) data with growth of 0.1 percent and 1.9 percent, respectively, it added.

Overall growth in Scotland remains forecast at just below 2 percent for 2015, and the labor market has remained resilient despite these headwinds and is performing close to pre-recession averages, according to the report.

Although positive for many sectors of the economy, the fall in the price of oil has impacted negatively on the oil and gas sector in Scotland, which is reflected in the economy's wider growth performance, it noted.

The appreciation of sterling and the more muted global economy has also affected export activity, particularly in manufacturing, said the report.

The balance of growth in 2016 should become more broad-based as improved productivity drives export growth and the wider service sector picks up, it added.

Scottish Deputy First Minister John Swinney said: "Recent data has shown that Scotland's economy has been performing well over recent years, with output and employment above their pre-crisis levels. Our economy, however, is facing a number of external challenges and the pace of growth has therefore slowed during the second quarter of the year."

He pledged that the Scottish government will continue to work with businesses to focus on growing the economy and promoting Scotland as a great place to do business. Endit