How wrong were we? The accuracy of the Fraser of Allander Institute's forecasts of the Scottish economy since 2000

The Fraser of Allander Institute regularly forecasts the annual growth of the Scottish economy. This paper measures the accuracy of these forecasts. It contrasts official measures of the growth performance of the Scottish economy and FAI forecasts for growth. Specifically, official measures of growth for the calendar years 2001 to 2010 are compared to forecasts for growth in these years made between January 2000 and spring 2011. Results show that: FAI forecasts of the direction of economic growth from one year to the next was statistically better than chance; the accuracy of forecasts improve as we get closer to the publication of the first growth estimate; excluding the „Great Recession‟, the mean absolute error of forecasts made up to eighteen months before publication of the first growth estimate for a year is approximately half a percentage point (i.e. 0.5%). There have often been significant revisions to Scottish GVA data, particularly at the start of the sample period. This emphasises the need for quality, and timely, indicators of economic performance for the Scottish economy as part of the information required for accurate forecasts in the future

Overview of the labour market [July 2007]

The latest figures on the labour market1 in Scotland are summarised in Table 1. Labour Force Survey (LFS) data show that in the three months to February 2007 the level of employment rose by 35 thousand, to 2,515 thousand. Over the year to February 2007, employment increased by 51 thousand

Forecasts of the Scottish economy [June 2009]

As acknowledged by Scotland’s Chief Economic Advisor in his State of the Economy presentation of May 2009, Scotland has been affected by developments in the world economy. It is likely therefore that Scotland’s future growth prospects will be significantly affected by the duration of the global downturn, and the speed by which, in some cases unconventional, policy decisions taken over the last six to nine months restore the world economies to a growth trajectory

Overview of the labour market [March 2006]

The latest figures on the labour market1 in Scotland are summarised in Table 1. Labour Force Survey (LFS) data show that in the three months to August 2005 the level of employment rose by 7 thousand, to 2,462 thousand. Over the year to August 2005, employment increased by 18 thousand. The employment rate – as a percentage of the working age population – rose to 75.5 per cent, up 0.3 percentage points on the previous quarter. Over the year to August 2005, the employment rate was up by 0.5 per cent. Figure 1 provides an account of quarterly LFS employment over a four-year period to August 2005

Overview of the labour market [October 2003]

The latest figures on the labour market in Scotland are summarised. Over the last quarter, Labour Force Survey (LFS) data showed that the level of employment rose in the three months to May 2003, to 2,427 thousand. Over the year to May 2003, employment increased by 51 thousand. The employment rate - as a percentage of the working age population in employment - rose to 74.3 per cent, up 0.1 percentage points on the previous quarter. An account of quarterly LFS employment over a four-year period to May 2003 is provided

Forecasts of the Scottish economy [February 2010]

In the three months since our forecasts in November 2009, several notable developments have occurred which will impact on the short- and medium-term growth prospects for the Scottish economy

Overview of the labour market [July 2005]

The latest figures on the labour market1 in Scotland are summarised in Table 1. Labour Force Survey (LFS) data show that in the three months to February 2005 the level of employment rose by 3 thousand, to 2,449 thousand. Over the year to February 2005, employment increased by 36 thousand. The employment rate – as a percentage of the working age population – rose marginally to 75.3 per cent, up 0.1 percentage points on the previous quarter. Over the year to February 2005, the employment rate was up by 0.9 per cen

Forecasts of the Scottish economy [November 2011]

In summary, we revise down our forecast for Scottish GVA growth in 2011 from 0.8% to 0.4%. This is due to rapidly falling household consumption indices, suggesting (for the UK, and by implication Scotland) a rapid falling off in consumer confidence since the summer months and a worsening global (particularly Euro zone) economic environment which has seen unprecedented declines in business activity and confidence during the second half of 2011. Continued high inflation, driven by commodity and energy price increases and temporary factors from recent changes to the VAT regime, will squeeze household incomes. Incomes themselves are seeing slower growth as inflation expectations remain anchored in the medium term, meaning real reductions in household income. Indeed the Bank of England warn against downside risks to meeting their 2% inflation target over the medium term as persisting weak domestic and external demand. Indicators suggest that 2012 will be a more difficult trading year, and our forecast has been revised down from 1.5% to 0.9%

Forecasts of the Scottish economy [October 2013]

The Scottish economy has shown signs of growth through the first half of 2012, exceeding our expectations so far through the year and has grown slightly less than the UK economy as a whole in this period. In part, this appears due to higher than expected contribution from household spending growth. While survey indicators suggest firms are optimistic about prospects for the second half of the year, we are uncertain about the extent to which a recovery on the back of households facing slow income growth is sustainable. In particular, the recent evidence on the Scottish housing market suggests that any wealth effect from increasing house asset prices is not being felt across all regions of the UK. Recent Scottish export figures show the importance of a swift and positive resolution of the (on-going at time of writing) future of the Grangemouth chemicals and refinery facility for the Scottish economy

Overview of the labour market [April 2007]

The latest figures on the labour market1 in Scotland are summarised in Table 1. Labour Force Survey (LFS) data show that in the three months to November 2006 the level of employment rose by 13 thousand, to 2,480 thousand. Over the year to November 2006, employment increased by 14 thousand. The employment rate – as a percentage of the working age population – rose to 75.3 per cent, up 0.2 percentage points on the previous quarter. Over the year to November 2006, the employment rate was down by 0.2 per cent. Figure 1 provides an account of quarterly LFS employment over a five-year period to September to November 2006