Scottish economic bulletin: March 2024

Economic Outlook

Economic conditions are forecast to improve with stronger growth and lower inflation.

• The outlook for economic growth in 2024 remains subdued however is expected to strengthen while inflationary pressures are forecast to moderate further.
• In December, the Scottish Fiscal Commission forecast Scottish economic growth to strengthen from 0.1% in 2023 to 0.7% in 2024, rising to 1.1% in 2025. Most recently in March, the OBR forecast the UK economy to grow 0.8% in 2024 rising to 1.9% in 2025.^[22],[23]
• In February, the Bank of England forecast inflation to fall from its current rate of 4% to temporarily meet the 2% target in Q2 2024, before rising to 2.7% in Q4 2024 and to 2.5% by the end of 2025. This reflects a further moderation in inflationary pressures although the persistence of above target inflation over the coming year.^[24]

  

• The average of independent UK forecasts further illustrates the expectation of stronger growth and falling inflation with UK GDP growth forecast on average to rise to 0.4% in 2024 and 1.2% in 2025, while inflation is forecast to fall on average to 2.2% in Q4 2024 and 2.1% at the end of 2025.
• There remains significant uncertainty in the economic outlook however the resilience of business and consumer sentiment, low unemployment, real earnings growth and falling inflationary pressures provide an improved basis for the stronger growth forecast for 2024. However, supply chain disruption through the Red Sea has presented a downside risk into the new year with businesses increasingly reporting that they are being impacted by longer delivery times and increased shipping costs.