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Economic commentary

Economic commentary

Our bi-monthly update on global, UK and Scottish economic trends and performance, drawn from a wide range of economic indicators and commentaries. Published April 2021.

Global trends

The IMF and the OECD have upgraded their economic forecasts, highlighting the impacts of coronavirus vaccine rollouts and ongoing government stimulus as significant boosts to expected growth. The outlook for the US, the world’s largest economy is, in particular, far more positive.

The IMF forecasts global GDP growth of 6% in 2021; the OECD forecasts 5.6%

Both organisations suggest growth will be relatively subdued in the first quarter of 2021 due to ongoing restrictions, but activity will rise from Q2 onwards as vaccination programmes expand.

Although most countries have seen an upward forecast revision in growth forecasts a significant degree of variance in recovery is still expected.

Growth is expected to be strongest in China, where a strong recovery began in 2020.

The US is also expected to post strong growth reflecting significant fiscal stimulus and faster than expected vaccine uptakes. It is expected this will also have a positive impact on the US's trading partners and spread through supply chains.

2021 forecasts for the UK and the Euro area were also revised upwards with the UK now expected to grow by over 5% in 2021. Again, these revisions are predominantly the result of accelerated vaccine deployment and are anticipated in spite of the lockdown in the first quarter.

UK trends

UK GDP growth slowed to 1.0% in Q4 2020, following a 16.1% expansion in Q3. Overall, GDP contracted 9.9% in 2020, the largest annual fall on record.

All UK sectors saw reduced output, with the accommodation and food sector hardest hit (43% contraction).

The latest monthly figures show that the UK economy grew by 0.4% in February, following a contraction of 2.2% in January.

UK growth forecasts by KPMG suggest growth of 4.6% for 2021 and 5.6% for 2022. These projections account for both the Q1 lockdown and the vaccine roll-out and suggest strong UK growth from Q2 2020.

The UK unemployment rate was 4.9% between December 2020 and February 2021, compared with a pre-pandemic rate of around 4%. The low rate is likely impacted by the furlough scheme.

UK business surveys also point to a rebound in business activity in March with increased customer demand from lockdown easing.

The RBS/NatWest Regional Business Activity Index for March reported a broad-based increase in business activity across the whole of the UK with the exception of Northern Ireland.

Inflows of new work in Scotland were stable although most other nations and regions saw increases.

Moreover, in contrast to all other UK regions apart from Wales, employment levels in Scotland continued to fall.

Scottish trends

Feedback from Scottish Enterprise customers


We release Scotland's economic commentary bi-monthly. This commentary reflects our understanding of issues at the time of writing drawn from a wide range of credible and respected sources and should not be taken as Scottish Enterprise policy.

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