Monthly economic brief: March 2021

Output^[1]

Although Scotland's GDP grew over the final quarter of 2020, monthly data show output fell over November and December as restrictions on activity tightened across the UK to suppress the second wave of coronavirus.

• Latest quarterly GDP statistics show Scotland's GDP fell by 9.6% in 2020, compared to 2019 (UK: - 9.9%), their largest annual falls on record.  In the final quarter of 2020, Scotland's GDP grew by 2% over the quarter (UK: 1%), however latest monthly GDP data suggests that this growth was confined to October with GDP estimated to have fallen 1.5% in November and 0.3% in December reflecting the tightening of restrictions on activity over this period.
• The contraction in December was driven by a further fall in Production sector output, which fell 1.8% over the month on the back of an 0.8% fall in November and a fall in Construction sector output (-2.4%); its first fall in output since April 2020. Following a 1.9% fall in output in November, Services sector output grew 0.3% in December, however there continued to be significant falls in sub-sectors such as Retail (-15.4%), Accommodation and Food Services (-6.7%), and Arts, Culture and Recreation (-1.5%) which have been most directly impacted by the tightening of restrictions.

• At its lowest point in April 2020, Scotland's GDP fell to 23.4% below its pre-pandemic level in February 2020.  As at December 2020, the six months of growth between May and October, followed by the fall in output over November and December has resulted in Scotland's GDP recovering back to 7.2% below its pre-pandemic level (UK: -6.3%).

• However there are notable differences across sectors in the scale of the initial fall in output in March and April 2020 during national lockdown and in the pace of recovery across sectors since then, which has largely reflected the nature of restrictions over the course of the year.  Manufacturing output fell 21.3% between February and April 2020, however in December Manufacturing output had recovered to 2.8% above its level in February, while Construction output fell 52.5% between February and April 2020 and in December had partly recovered back to 9.4% below its level in February.

• Consumer facing parts of the services sector however have been more directly impacted by restrictions on activity over the course of the year. For example, Accommodation and Food Services output fell 82.5% between February and April 2020 during the national lockdown, however in December, output from the sector remained 60.5% below its level in February, reflecting the slower pace that restrictions were eased for these parts of the Services sector during the summer months and that they have been most directly impacted by the retightening of restrictions in the latter part of the year.  Similarly Arts, Culture and Recreation output in December remained 42.3% below its February 2020 level, having fallen 53.2% between February and April 2020.

• The overall pattern of Scottish GDP during the pandemic has broadly been in line with the UK as a whole.  However differences between months and across countries reflect differences in the structure of economies and the stringency and timing of restrictions, while differences in how components of GDP are calculated across countries also make international comparisons complex.
• United States GDP fell 3.5% in 2020 (compared to 2019) having contracted 9% in Q2 2020 followed by growth of 7.5% and 1.0% in the third and fourth quarters. Euro Area GDP fell 6.6% in 2020 having contracted by 11.6% in Q2 2020 followed by growth of 12.5% in Q3 2020 and a further contraction of 0.7% in the fourth quarter.