Fraser of Allander Institute: Scottish economy to reach pre-pandemic peak in summer of 2022
The Fraser of Allander Institute (FOAI) at the University of Strathclyde now forecasts that the economy will reach its pre-pandemic peak in the summer of 2022, three months earlier than was forecast in March.
The recent opening of the Scottish economy enabled by the swift vaccine rollout, has led to expectations for Scotland’s economic growth being revised up to 5.9% in 2021 and 2.5% in 2022, according to the latest Economic Commentary sponsored by Deloitte.
The institute has said that while recent pauses in the roadmap to ease restrictions have been challenging, particularly for those sectors and regions hardest hit by the pandemic, the Scottish economy has seen significant opening up since late April. This has been facilitated by the vaccine deployment, which has seen 82% of the adult population receive their first dose.
The FOAI added that despite the optimism, there are also risks to recovery which could provide headwinds to growth. The dislocation in global trade was significant due to the pandemic and the UK’s exit from the EU. This has led to major issues for manufacturers and others trying to rebuild these supply chains.
It said that while the economy faces significant changes as it moves through to the recovery phase, the way people work has also changed, particularly for those who have been able to work from home during the pandemic.
The commentary stressed that as some businesses begin to consider a part-time return to the office, alongside homeworking practices, it remains to be seen how persistent these changes will be.
This edition of the commentary continues the discussion about the future of work, examining the sectoral differences of both prevalence and possible persistence of new ways of working.
Mairi Spowage, director of the institute, said: “Despite the pausing in the easing of restrictions we have seen over the last week or so, it is undoubtedly the case that growth is returning to our economy.
“In the aggregate, consumers appear to be ready to spend the record savings that have been accumulated throughout the course of the pandemic - with a large proportion of the population vaccinated, people have shown that in general they are keen to spend their money in social settings to feel a bit more normality.”
“Despite our optimism, it is important to remember that forecasts are still very uncertain.
“The lengthening of the roadmap we have seen in recent days underlines the unpredictable nature of this virus, and the road ahead is likely to continue to be a bumpy one.”