Outlook and appraisal [March 1989]

The Scottish economy is standing up surprisingly well to last year's interest rate rises. Retailing and wholesaling are showing signs of reduced optimism but sales remain strong if below expectations. Manufacturing and Construction remain buoyant. Investment is particularly strong. However, with demand in both the World and British economies falling during 1989, Scotland should be similarly affected. But there are indications that Scottish economic performance might hold up better to such a downturn than on previous occasions. Nevertheless, the outlook does very much depend on whether the current inflationary pressure in Britain can be reduced without the economy being tipped into recession. The probability of a stagflationary outcome appears somewhat greater than when we last reported