Economic Commentary – April 2024

The Economic Commentary provides a regular 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.

The IMF is forecasting global GDP growth will remain ‘steady but slow’ at 3.2% over 2024 and 2025, the same pace as in 2023. Emerging and developing market economies are expected to grow much faster than advanced economies. Business activity continued to increase across all major global economies in March, although the pace slowed in both the US and UK. The euro area remains the weakest performer. The UK economy grew in both January (+0.3%) and February (+0.1%). Although growth is weak, it does suggest that the recession has not extended into the first quarter of this year. Consumer price inflation fell to 3.2% in the year to March, the lowest for over two years. Business activity in March rose in 11 out of 12 UK regions (including Scotland) supported by a general upturn in demand. UK manufacturing output returned to growth for the first time in five months. In Scotland, business activity growth was driven exclusively by the service sector, while manufacturing output continued to decline. The Scottish economy grew by 0.6% in January, following +0.4% in December, significantly stronger than UK performance. 31% of Scottish businesses reported an increase in monthly turnover in February, the highest for almost a year. Scotland’s labour market shows signs of cooling - the unemployment rate increased 0.8ppts to 4.0% over the year to December - February, while the employment rate fell to 74.2%. Fewer Scottish businesses are reporting worker shortages and recruitment activity also slowed in March. SE customers are generally reporting strong order books, and becoming more optimistic as input price inflation eases, providing more certainty. Main challenges are attracting skilled staff, availability of property and for some access to growth finance. The OBR is forecasting UK GDP growth to increase slightly to 0.8% in 2024 then to 1.9% in 2025. For Scotland, the Fraser of Allander Institute is less optimistic with forecasts of 0.6% in 2024 and 1.1% in 2025.

The paper makes no recommendations.