Monthly economic brief: January 2022

GDP growth outlook

The pace of Scottish GDP growth is forecast to moderate in 2022 as the economy continues to stabilise, while cost of living pressures are expected to intensify.

• The most recent Scottish Fiscal Commission (SFC) forecasts from December 2021 expect the Scottish economy to grow 6.7% in 2021 before moderating to 3.8% in 2022 and 1.3% in 2023, while the Fraser of Allander Institute Q4 2021 Economic Commentary forecasts Scottish GDP growth of 6.4% in 2021 and 4.7% in 2022.^{[26], [27]}
• Since the forecasts were undertaken, public health restrictions have changed in Scotland and across the UK during December and January and as such are yet to reflect the full short and medium term impacts of the Omicron wave on the Scottish economic outlook.
• At a UK level, the average of new independent forecasts in January (published monthly by HMT) forecast UK GDP to have grown 7.1% in 2021 and to moderate to 4.4% in 2022. The average new forecast for 2022 has progressively weakened in recent months, likely reflecting the persistence of supply chain disruption, inflationary pressures, alongside the emergence of Omicron.^[28]

  

• In January, the IMF also revised down its UK GDP growth forecast for 2022 to 4.7%, from 5% in October, reflecting the impacts of Omicron on economic activity and ongoing supply constraints in the labour and energy markets. Growth is forecast to ease further to 2.3% in 2023.^[29]
• This is part of a general downward revision to forecasts for 2022 across countries with the IMF forecasting global growth of 4.4% in 2022, down from 4.9% forecast in October. This reflects the disruption to the global economy from the spread of the Omicron variant and the reintroduction of restrictions, combined with the persistence of supply disruptions and inflationary pressures.