Monthly economic brief: December 2020

Output

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Scotland’s GDP data for October showed that output continued to recover from the record fall in April, however, the pace of recovery further slowed from June and July.

• Scotland’s GDP grew 0.6% in October (UK: 0.4%), its sixth consecutive month of growth, after the sharp falls of 19.3% in April and 5.6% in March.
• Growth over this period reflects that output has been recovering as business and consumer activity strengthened with the easing of the national lockdown restrictions during the summer months.
• However, as in the UK as a whole, the pace of recovery has slowed significantly from the initial rebound in growth in June (6.6%) and July (7.6%) with ongoing weakness in underlying demand (domestic and international) and the introduction of regional restrictions on activity in October.

• This is notable at a sector level.  In October, there was growth in the Construction (1.2%) and Production (2.7%) sectors, however, there was zero growth overall in the Services sector.  While output in most services subsectors did increase, this was offset by a fall of 15.9% in accommodation and food services as regional restrictions on hospitality activity were introduced for several weeks across the central belt NHS Board areas.
• Overall, GDP in Scotland remains 5.7% below its level in February (UK: 7.9%), prior to the full direct impacts of the pandemic on the economy.  However the recovery in output varies significantly by sector.  In the Production sector output has recovered to 2.2% above its level in February, while Construction output remains 9.1% below and Services 7.2% below.  Within the Services sector, there remains significant variation across industries with consumer facing industries such as Accommodation and Food Services (-43.5%) and Arts, Culture and Recreation (-26.7%) experiencing the slowest recoveries amidst ongoing restrictions.

• The overall path of Scottish GDP during the pandemic has broadly been in line with the UK as a whole, though the impacts of the pandemic internationally have varied, reflecting the scale and duration of restrictions across countries. 
• In Q3 2020, US GDP grew 7.4% (following a 9.0% fall in Q2) and Eurozone GDP grew 12.5% (following a 11.7% fall in Q2).