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The Scottish economic system has continued to display resilience regardless of a “difficult and unsure” international atmosphere, a report has discovered.
The newest Fraser of Allander Institute quarterly financial commentary mirrored a “stronger than anticipated” financial efficiency, regardless of ongoing tensions within the Center East.
The financial researchers have revised their forecast for Scottish GDP development in 2026 upwards from 0.9% to 1.0%.
Nevertheless, the commentary additionally stated important dangers stay as labour market indicators level to a softening in financial circumstances, with employment falling and each unemployment and financial inactivity growing within the first quarter of 2026.
Institute director Professor Mairi Spowage stated: “It’s encouraging to see the Scottish economic system persevering with to develop regardless of a difficult and unsure international atmosphere.
“The stronger-than-expected efficiency within the first 4 months of 2026 has led us to revise our development forecast upwards, demonstrating the resilience of households and companies alike.
“Nevertheless, it’s too early to conclude that these challenges have handed. The battle within the Center East continues to create uncertainty for companies and policymakers, whereas latest labour market information recommend some softening in hiring exercise.”
The institute concluded that inflationary pressures have eased in latest months, however the results of rising power prices are having a delayed response.
They stated whereas gas and transport prices are already seen within the information, family fuel and electrical energy payments are more likely to present a clearer affect from July, when the Ofgem worth cap rises.
Prof Spowage stated the longer the disruption in the important thing Strait of Hormuz transport passage continues, there’s a higher danger of a “extra extended affect”.
She stated: “Power markets and the normalisation of exercise by the Strait of Hormuz will stay essential indicators to observe over the approaching months.
“The longer disruption persists, or the extra frictions there are within the motion of oil and fuel, the higher the danger of a extra extended affect on exercise and costs.
“Whereas the latest development figures are welcome, the outlook stays unsure and a level of warning continues to be warranted.”
