March Nowcasts

It is a highly uncertain time for the global economy, with the increasing spread of Coronavirus (COVID19).

We’ve been asked by a number of people about the effect on the Scottish economy of COVID19. At this stage, it is difficult to tell how large the effect on economic activity in Scotland is or will be. In particular, given the significant uncertainty about the scale of the impact and in turn the government response.

On the wider issue of the impact on the global economy, there have been a number of interesting blogs. Rather than repeat the argument here, we would suggest reading Simon Wren Lewis’s blog on this here, a blog from the World Economic Forum here, this piece on The Conversation, and of course Nobel Laureate Paul Krugman in the New York Times.

Global pandemic fears notwithstanding, and in honour of tradition, we’ve produced updated nowcasts for the Scottish economy.

While these are ‘nowcasts’ importantly they are underpinned by the available economic data.

To date, we have limited economic data on the world economy following the spread of Coronavirus, and even less on the Scottish economy since the detection of the virus in Scotland.

In time, and as more data is released, we expect to better understand the effect that this global health emergency has on the economy.

In the meantime, our model estimates – absent any substantial change in the underlying economic indicators – is for continued albeit weak growth.

Specifically our estimates are for:

  • Growth in 2019 Q4 of 0.27% which, at an annual rate, is 1.08%
  •  Growth in 2020 Q1 of 0.27% which, at an annual rate, is 1.10%

Later this month we will release a new edition of the Fraser Economic Commentary where we will provide a wider analysis of the leading indicators of the global, UK and Scottish economy and a wider discussion of the likely impact of the virus on the Scottish economy.

Authors

The Fraser of Allander Institute (FAI) is a leading economy research institute based in the Department of Economics at the University of Strathclyde, Glasgow.

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