Economic Commentary - February 2022

The Economic Commentary provides a monthly update on global, UK and Scottish economic trends, drawing on recent economic data as well as feedback from businesses.

The methodology consisted of desk research.

All major global economies reported growth in the final quarter of 2021 as generally looser COVID restrictions led to a rebound in consumer spending, despite rising COVID infections in some countries late in the quarter. The UK economy expanded by 1.0% in the final quarter, bringing annual growth in 2021 to 7.5%. Recent business surveys suggest business activity has regained momentum following disruption caused by the Omicron outbreak in December. Scottish economic output rose above its pre-pandemic level for the first time in November, following a similar pattern as the rest of the UK. Business activity also appears to have navigated the Omicron outbreak largely unscathed, expanding for an eleventh consecutive month in January. Demand for workers remains strong, and businesses appear increasingly confident to hire permanent staff. Businesses across most industry sectors continue to report recruitment difficulties, inflationary pressures (rising energy, staff and raw materials costs), and some supply chain disruption. Around a quarter of exporters are exporting less than normal. The biggest opportunities reported by businesses over the next year are around new markets, products and international growth. Global GDP is likely to continue to recover in 2022 but at a slower pace than previously expected, reaching 4.4%.The recovery has been adversely affected by the latest COVID-19 outbreak, along with continued supply disruptions and rising energy prices which have led to higher than anticipated rates of inflation, most notably in the US, which is likely to negatively impact consumer spending. The latest independent forecasts for Scotland predict GDP growth of around 4.8% in 2022.

This paper makes no recommendations.