GDP in Scotland fell by twice as much as it did in the UK in the final three months of last year, official figures show.
But Scotland has not yet gone into recession, according to the data, despite the economy shrinking by 0.6% over the period October to December.
In the UK as a whole, GDP fell 0.3% over the same period – putting the country into recession as it was the second consecutive quarter of negative economic growth.
In Scotland, the fall of 0.6% came after growth of 0.4% between July and September, meaning there have not been two consecutive quarters where GDP has fallen – which defines a recession.
A Scottish Government report said: “In 2023 quarter four (October to December), Scotland’s GDP fell by 0.6% in real-terms compared to quarter three, following growth of 0.4% in quarter three.
“Over quarter four, GDP for the UK as a whole fell by 0.3%.”
The data shows that in the final three months of 2023, the services sector, which makes up the bulk of Scotland’s economy, decreased by 0.1%.
Output in the construction sector was down 1.3%, with the production sector suffering a 3% fall.
Scotland’s economy is now estimated to have increased by 0.2% over last year, according to the data, with this growth above the 0.1% seen across the UK as a whole for 2023.
But when comparing the final three months of 2023 with the same period the previous year, the economy in Scotland is estimated to be 0.3% smaller, compared to the 0.2% fall for the UK.
Wellbeing Economy Secretary Mairi McAllan said the figures showed that “the Scottish economy is still battling against some extremely challenging circumstances, including the effects of the UK Government’s disastrous mini budget”.
But she stated: “It is encouraging, however, that unlike the UK, Scotland has avoided a recession this quarter.”
Ms McAllan continued: “The figures reflect the cost-of-living challenges facing households which, in turn, affects the wider economy, while businesses continue to suffer the unforgivable impact of Brexit on supply chains, trade and the free movement of people.”
She stressed the Scottish Government was “doing everything possible within its limited powers to provide support” to the economy, adding that the New Deal for Business Group was focusing on “policies that will have a positive impact on the day-to-day operations of companies”.
Commenting on the figures, Scottish Secretary Alister Jack said: “The UK Government has halved inflation and, in doing so, we’ve broken down the single biggest barrier to growth.
“We are sticking to our plan to achieve long-term sustainable recovery.
“We are boosting business and encouraging trade and opportunities by investing more than £2.9 billion directly across all parts of Scotland.
“We’re also putting more money in the pay packets of 2.4 million people in Scotland by cutting national insurance and rewarding hard-working families with the biggest ever increase to the national living wage from next month.”