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Scottish Economic Statistics 2002

chapter one: Economic Accounts

GDP growth

Recent evidence has indicated that since the rapid growth in the early 1990's, the Scottish economy has experienced a period of stability with little growth in output, in real terms, over the past two years. The events of 11th September are not yet reflected in the most recent figures, which apply to the third quarter of 2001, so it is too early fully to assess its effect. Independent forecasters are predicting only modest acceleration in 2002.

GDP data for the third quarter of 2001 showed the Scottish economy experienced a decline in output during the period (of 0.4 per cent). Growth over the four quarters to 2001 Q3 compared to the previous four quarters was 0.8 per cent, which, although positive, was lower than in the UK as a whole (2.6 per cent).

Chart 1.1: Real GDP growth, 1995 to 2001

GDP growth in the industrial sectors

The Scottish economy continues to display considerable variation between sectors. Within services, some sectors have experienced a slowdown whilst others are continuing to perform well. In contrast, manufacturing has been suffering, with output falling in five successive quarters up to 2001 Q3, the latest quarterly drop being 2.0 per cent.

Over the year to the third quarter of 2001, within the slight rise of 0.8 per cent in overall GDP, service sector output increased by 3.3 per cent and the decrease in manufacturing GDP was 4.7 per cent.

The largest increases in output over the year to 2001 Q3 in Scotland were in Financial Services (9.2 per cent) and Real Estate & Business Services (7.4 per cent). The largest fall was in Electrical & Instrument Engineering, -11.1 per cent.

Chart 1.2: Quarterly indices of output by industrial sector

Manufactured exports

The value of Scottish manufacturing exports for the third quarter of 2001 stood at £4.5 billion in current prices. This represented a real increase of 5.9 per cent in the value of exports compared with the previous year.

Chart 1.3: Growth of Scottish manufactured exports (current prices), 1995Q1 to 2000Q3

Manufactured exports and electronics effects on GDP

When considering overall GDP growth, it is useful to examine movement which is due to some of the influential and high profile areas of demand and activity, such as manufactured exports and the electronics industry (of course, electronics account for a significant proportion of manufactured exports, so these are not mutually exclusive). Chart 1.4 shows how the contributions to GDP from electrical and instrument engineering (E&IE), manufactured exports and the rest of the economy have changed since 1996. It can be seen that, despite the recent growth in the value of Scottish manufactured exports reported above, its actual contribution to GDP has been dropping over the last few quarters. This is likely to be due to a combination of factors, including the changing profile of exports (less from the high value-added industries and more from the industries with a lower ratio of GVA to output), and to the changing levels of productivity within the exporting industries.

The contribution of E&IE to overall GDP has dropped since the middle of 2000. However, the rest of the economy has grown slightly - enough to maintain the total GDP level (except in the latest quarter, where recently published figures show a slight drop).

Chart 1.4: The effects of manufactured exports and the electronics industry on GDP, 1996 to 2001

Balance of trade

The industry balance of trade compares imports of all goods and services by an industry with its exports of all goods and services. It is available from the Scottish Input-Output Tables³⁰. Industry balance of trade is varied across non-manufacturing sectors. Transport and communication industries show a large surplus with the RUK (£1.9bn) while public administration, unsurprisingly, show a deficit with both the RUK and RoW (chart 1.5).

Chart 1.5: Trade balance by industry (excluding manufacturing), 1998

Most manufacturing industries show a positive balance of trade with both the rest of UK and the rest of the world; the exception being "office machinery and computers" which shows a deficit of £600million with the rest of the UK (Chart 1.6).

Chart 1.6: Manufacturing trade balance by industry, 1998

Annually Chain Linked Estimates

To estimate the overall Scottish balance of trade with RUK and RoW we must take into account the activities of final demand (e.g. households, government). Estimated from the Industry by Industry matrix (Table 1.6), this gives a Scottish balance of trade with the RUK of approximately -£8bn, and a balance of trade with the RoW of approximately +£4bn.

In total, 18 per cent of Scottish output was exported to the RUK and 16 per cent to the RoW. The other destinations for output are: 33 per cent to domestic industries, 16per cent to consumers, 16 per cent to Government and 5 per cent invested in capital formation (Table 1.5).

GDP (I)

In income terms, Scottish Gross Value Added at basic prices was estimated as £62bn for 1998 (Table 1.5). This comprised: 62 per cent compensation of employees, 2 per cent taxes and subsidies on production and 36 per cent gross operating surplus.

In 1999, Scottish GDP was estimated as £64 bn, as shown in table 1.1. This table has not been updated from last year's SES because the ONS income-based estimates of GDP for 2000 have been delayed due to technical problems, but these should be available in the next 6 months.

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