Gross Domestic Product
Scotland’s economy continued to strengthen in the first half of 2018, building on the rebound in growth in 2017.
Latest data show Scotland’s GDP grew 0.5% in the second quarter of 2018 and 1.7% over the year.
This was the highest rate of annual growth in Scotland since 2014 and higher than UK wide growth of 1.2%.
Scotland and UK Annual GDP Growth
Growth was broad based with the services, production and construction sectors all growing. The services sector grew 0.4% over the quarter, supported by a pick-up in output growth from Retail and Wholesale and Financial and Insurance Activity sectors. The Retail and Wholesale sector in particular contributed most strongly to overall GDP growth, supported by a moderate uplift in retail sales in the first half of 2018, despite the ongoing challenging trading conditions for high street retailers.
The construction sector returned to positive growth in the second quarter, growing 1.8%, in part rebounding from the weather related temporary disruption to activity at the start of the year. Over the past year as a whole, construction output growth has been broadly flat, easing back from the more rapid growth in 2015-16. Since the last State of the Economy report, there have been revisions to the construction sector data in Scottish GDP statistics, which are detailed in the box below.
Scottish Output Levels by Sector
Production sector output has continued to expand in 2018 and recover from falling levels of output in 2015 and 2016. The production sector grew 0.6% over the second quarter and 4.6% over the past year, the fastest rate of annual growth in the sector since 2014. Growth in Manufacturing output provided the strongest contribution to production sector growth over the quarter supported by a pick-up in growth in Food and Drink output and Manufacturing sector Repairs and Installations.
The strengthening in production sector output, and across the economy more broadly over the past 18-months, has been underpinned by stronger global growth and the lower value of Sterling supporting export activity.