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27 ^th April 2005
A Scottish Executive National Statistics Publication

ISBN 0 7559 2541 6 (Web only publication)

This document is also available in pdf format (384k)

Gross Domestic Product in Scotland rose by 1.9 per cent over the year 2004 and by 0.6 per cent in the fourth quarter of 2004 according to provisional estimates released today by the Scottish Executive.

The main findings of the latest figures are:

• GDP rose by 1.9 per cent over the year 2004 and by 0.6 per cent in the fourth quarter of 2004 (seasonally adjusted).
• Over the year 2004, annual output in the Scottish service sector grew by 1.9 per cent, compared with a 0.1 per cent decrease in the production sector and a 7.3 per cent rise in construction.
• In the fourth quarter of 2004, the service sector grew by 0.6 per cent, the production sector rose by 0.3 per cent and the construction sector by 0.7 per cent.
• The service sector was the main driver of growth in the latest quarter. Over the year, the service and construction sectors were the main sources of growth.

UK Figures:

• The UK figures show that GDP rose by 3.1 per cent over the year 2004 and by 0.7 per cent over the latest quarter.
• Over the year 2004, the UK experienced a 4.1 per cent growth in services, a 0.4 per cent growth in production and 3.7 per cent growth in construction.

Industry Analysis:

• Output in the manufacturing sector grew by 0.8% in the latest quarter. Over the year, the sector showed no change.
• Within manufacturing, the main sectors driving the quarterly increase were chemicals ( 3.2%), transport equipment ( 3.5%), mechanical engineering ( 2.7%) and metals ( 1.3%).
• Over the latest quarter, the service sector grew by 0.6 per cent. Within this sector the main drivers of the quarterly increase were transport, storage & communication ( 2.5%), retail & wholesale ( 0.9%) other services ( 1.5%) and hotels & catering ( 1.7%).

NEXT PUBLISHED (Provisionally): 27 ^th July 2005

Table 1: Gross Value Added chained volume measures at basic prices, ^1,2 by category of output
Scotland, 1998 to 2004 Q4

2001=100

1. Gross Value Added ( GVA) is also referred to as Gross Domestic Product ( GDP) at basic prices
2. Estimates cannot be regarded as accurate to the last digit shown
3. Weights may not sum to the total due to rounding

BACKGROUND NOTES

Definitions

1. Gross Domestic Product ( GDP) is a measure of the value of goods and services produced by residents, before allowing for depreciation or capital consumption. Net receipts from interest, profits and dividends abroad are excluded. The estimates produced in this publication measure GDP at basic prices (also referred to as gross value added ( GVA)).

Methodology

2. In February 2004, on publication of results for 2003 Q3, the Scottish GDP estimates moved to annually weighted and chained estimates of volume measures - referred to as "annual chainlinking" - as recommended in the System of National Accounts 1993. This is consistent with the UK where this approach was introduced on 30 September 2003 in respect of the 2003 Q2 results. Annual chainlinking is achieved by producing a weighted average of over 260 separate indices (160 of which are in the production sector). The indices represent changes in the value added, at constant prices, in the production of goods and services in individual industries. These industries are compiled using the standard industrial classification SIC2003.

3. The main difference between chainlinking and the previous "fixed base" methodology is that the weights applied to each industry (reflecting importance in the Scottish economy) are updated on an annual basis, instead of a 5-yearly basis. The major effect of chainlinking has been to more accurately reflect the changing importance of sectors. The impact of chainlinking the Scottish GDP series to 2000 weights was to reduce the negative effect of the low/declining growth in some sectors, while simultaneously increasing the importance of those which had been performing well. Both of these changes had a positive effect on the overall level of growth estimated by the Scottish GDP series. In October 2004 the weights were updated to 2001 in line with the annual chainlinking methodology. The effects of the new weights on the overall GDP index were negligible. There was a slightly positive effect on production and construction balanced by a very small negative effect on services with the result of almost no change to total GDP. An article providing more information about the chainlinking methodology was published in Scottish Economic Statistics 2004 www.scotland.gov.uk/stats/ses.

4. Series are derived from indicators based on data from a wide range of sources. Examples include: deflated turnover, deflated production, the volume of a good or service sold or produced and, for some parts of the public sector, employee numbers.

5. The quarterly Scottish GDP estimates are published within 4 months (approximately 17 weeks) of the end of the quarter to which they relate.

6. The indices published within this Statistics Publication Notice are grouped according to the 2003 revised Standard Industrial Classification. The four broad groupings of industries are

(a) agriculture, hunting, forestry and fishing

(b) production which comprises: mining and quarrying industries; energy and water supply; and manufacturing, which includes: refined petroleum products and nuclear fuel; chemical and man-made fibres; metal and metal products; engineering and allied industries; food, drink and tobacco industries; textiles, footwear, leather and clothing; other manufacturing.

(c) construction

(d) services, which includes: retail and wholesale; hotels and catering; transport, storage and communication; financial services; real estate and business services; public administration, education and health; other services.

7. Scottish GDP estimates will generally be less reliable than the estimates for the UK, primarily because the equivalent UK figures are produced by balancing 3 independent sets of estimates (Output ( GVA), Income & Expenditure-based approaches). Furthermore, the survey data tend to be based on smaller numbers of units, making figures for Scotland more likely to be subject to small random fluctuations.

Cash Estimates of GVA

8. Estimates of the cash value of gross value added ( GVA) at current prices for Scotland (and other regions of the UK) are produced by the Office for National Statistics. Estimates for 2003 were published on 22 ^nd December 2004. The ONS current price value estimates are methodologically different from the Scottish Executive volume (constant price) index and are based on different data sources.

Revisions

9. The figures in this Statistics Publication Notice incorporate revisions to previously published estimates. These are mainly due to revisions to input data and adjustments to seasonal factors. Tables 8 - 13 identify the extent of revisions since the last publication in January 2005. Note that revisions are shown to one decimal place for total GVA and GVA excluding oil & gas and to zero decimal places for all other sectors.

Revisions are minimal this quarter, however the series most affected are:

• Agriculture, Forestry &Fishing - due to the availability of updated annual data for agriculture and subsequent adjustments to seasonal factors;
• Real Estate and Business Services - due to revised input data and adjustment to seasonal factors;
• Hotels & Catering - due to revised input data;
• Food, Drink & Tobacco - due to revised input data.

National Statistics

10. National Statistics are produced to high professional standards set out in the National Statistics Code of Practice. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

11. Detailed results for all industries are available to download from the Scottish Executive website www.scotland.gov.uk/gdp.

Issued by

Office of the Chief Economic Adviser
Office of the Permanent Secretary

Telephone
Press Office: Tim Jayes 0131-244-2682
Statistician: Julie Ramsay 0131-244-3771

Tables

Table 1: Gross Value Added chained volume measures at basic prices, by category of output
Table 2: Gross Value Added chained volume measures at basic prices, by category of output
Table 3: Gross Value Added chained volume measures at basic prices: service industries
Table 4: Gross Value Added chained volume measures at basic prices: detailed service industries
Table 5: Gross Value Added chained volume measures at basic prices: production industries
Table 6: Gross Value Added chained volume measures at basic prices: detailed production industries
Table 7: Gross Value Added chained volume measures at basic prices by category of output
Table 8: Revisions to data published on 26 January 2005 (Table 2)
Table 9: Revisions to data published on 26 January 2005 (Table 3)
Table 10: Revisions to data published on 26 January 2005 (Table 4)
Table 11: Revisions to data published on 26 January 2005 (Table 5)
Table 12: Revisions to data published on 26 January 2005 (Table 6)
Table 13: Revisions to data published on 26 January 2004 (Table 7)

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