\n The latest Fraser of Allander Institute quarterly economic commentary reflected a \u201cstronger than expected\u201d economic performance, despite ongoing violence in the Middle East.\n<\/p>\n
\n The economic researchers have revised their forecast for Scottish GDP growth in 2026 upwards from 0.9% to 1.0%.\n<\/p>\n
\n READ MORE: 12 Scottish firms named and shamed in list of \u2018deliberate tax defaulters\u2019<\/a>\n<\/p>\n \n However, the commentary also said significant risks remain as labour market indicators point to a softening in economic conditions, with employment falling and both unemployment and economic inactivity increasing in the first quarter of 2026.\n<\/p>\n \n Institute director Professor Mairi Spowage said: \u201cIt is encouraging to see the Scottish economy continuing to grow despite a challenging and uncertain global environment.\n<\/p>\n \n \u201cThe stronger-than-expected performance in the first four months of 2026 has led us to revise our growth forecast upwards, demonstrating the resilience of households and businesses alike.\n<\/p>\n \n \u201cHowever, it is too early to conclude that these challenges have passed. The conflict in the Middle East continues to create uncertainty for businesses and policymakers, while recent labour market data suggest some softening in hiring activity.\u201d\n<\/p>\n \n The institute concluded that inflationary pressures have eased in recent months, but the effects of rising energy costs are having a delayed response.\n<\/p>\n \n READ MORE: How long can Anas Sarwar continue limping along as Scottish Labour leader?<\/a>\n<\/p>\n