Economic Commentary - April 2021

A summary of the global, UK and Scottish economies using the latest economic data available. The commentary also pulls insights from Scottish Enterprise managed companies and draws out some implications for policy makers.

The methodology consisted of desk research.

There are some signs of optimism from the Commentary this month as Scotland begins to move out of lockdown and countries around the world rollout vaccine programmes. Both the IMF and the OECD for example have upgraded their forecasts for global economic growth to 6% and 5.6% respectively. This reflects the rollout of COVID-19 vaccines and more government fiscal stimulus, particularly in the US. Forecasts for the UK for 2021 are particularly strong after being hit harder than other regions over 2020. Recent UK business surveys also point to a rebound in business activity in March with increased customer demand from lockdown easing. Similarly in Scotland, business confidence has been rising. Official data, which tends to lag behind business surveys shows a more negative picture with UK GDP for example, contracting by 9.9% in 2020, the largest annual fall on record. Unemployment levels are also considerably higher in Scotland and the UK in February 2021 compared with the previous year. Particular economy sectors have also been affected more than others.

There are signs that the Scottish economy is recovering and business confidence is rising. There are also early signs that businesses are adapting to the new trading relationships with the EU, although some issues remain in specific sectors (e.g. food manufacturing). Significant uncertainty is expected to persist for the foreseeable future and the economy will need to continue to respond quickly and innovatively to ongoing challenges.