Scotland's economy continued to strengthen over the first half of the year, moving from recovery to expansion mode, a new report has found.
The country is forecast to have its strongest year of growth since 2007, according to the Scottish Government's latest State of the Economy report.
Ouptut expanded by 1% in the first quarter of 2014, moving beyond pre-recession levels, and business surveys indicate that expansion has continued in the second quarter of the year.
The report also noted an improving picture in the Scottish labour market where it found that improvements in the economy have been echoed.
Employment has continued to rise to reach record levels, although population growth means that the employment rate has yet to fully recover to its pre-recession high.
However it said that there is still a degree of "overhang" from the crisis with real wages still well below pre-crisis levels and yet to see any significant upward movement.
It said that unemployment and underemployment remain elevated with a large number of people looking for work or seeking to work longer hours than they are currently.
The report said that there is nevertheless a general consensus that confidence in Scotland is returning to pre-recession levels and that this should in turn support a cycle of further investment, growth and employment creation.
Finance Secretary John Swinney said: "I welcome the Chief Economist's report, which shows that the economy has shifted from recovery into expansion mode and this is set to continue throughout 2014 and into 2015. This is great news for business and for hard working people across the country.
"The most recent GDP forecasts also point to a continuation of an improving economic performance. This follows on from recent statistics which show employment in Scotland is at a record high and Scotland's GDP has grown 1% over the last quarter.
"The recovery in the Scottish economy is now well-established, however challenges remain, and that is why the Scottish Government is doing everything within its currently devolved powers to support growth and to reduce inequalities.
"With the full powers of independence we could do even more. Independence would give us the opportunity to set policies on taxation, innovation and labour market regulation - securing stronger levels of economic growth and job creation from which all the people of Scotland could benefit."
The report said that most indicators point to a continuation of an improving economic outlook.
Forecasts for the Scottish economy have been revised up with an expectation that growth will accelerate this year.
It found that forecasts are for job-creation to carry on throughout 2014 and that the growth in demand should also hopefully support the first sustained rise in earnings since the financial crisis.
However the report said that the recovery in Scotland and the UK has taken longer than first anticipated with a number of particular challenges including the pace of growth in key external markets and the as yet uncertain response to the gradual normalisation of interest rates and monetary policy as the recovery continues.
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