Scotland's economy is showing "optimistic" signs of recovery to pre-recession levels, according to the Scottish Government's chief economist.
Employment, exports and economic confidence amongst households and businesses all rose throughout 2013, while unemployment and economic uncertainty has fallen, Dr Gary Gillespie's latest state of the economy report said.
However, investment has remained "relatively weak", and sustained recovery
will require a sustained rise in productivity and real wages, he said.
The report states: "The macroeconomic indicators for Scotland provide grounds for some optimism, with the economy moving closer to pre-recession levels.
"The growing recovery in the UK, US, and more recently in the euro area also spell positive news, as they are Scotland's most important trade partners.
"Looking ahead, as in the rest of the UK, sustaining the recovery in Scotland into the medium term will require an improvement in underlying competitiveness, linked to a sustained pick up in productivity and real wages.
"With the strengthening in output and the labour market over the year, and a more positive level of confidence across sectors, recent Scottish output
forecasts have been revised upwards. Overall, the outlook for next year is more positive than 12 months ago."
It added: "Economic recovery in Scotland has continued through 2013, and with it we have seen a reduction in economic uncertainty and a boost to household and business confidence.
"The strengthening of the Scottish economy over the year has been reflected in the labour market, with employment continuing to rise, driven by a rise in full-time employment, whilst unemployment and in particular economic inactivity have continued to come down.
"As elsewhere, household consumption has been the main determinant of the
Scottish recovery over the past year. For a sustained recovery to take hold there is a need to ensure that such growth is supported by investment and net trade. Exports provided a small, positive boost to growth over the year, with the contribution of net trade picking up more recently.
"Although investment has remained relatively weak over the year, as confidence returns this should help spur investment, and business survey evidence indicates that investment intentions for the forthcoming year are improving, especially relative to 2012 and 2013."
Finance Secretary John Swinney said: "The chief economist's state of the
economy report predicts continual progress in Scotland's economic recovery in 2014 having seen growth continue through 2013.
"This report confirms that the labour market has also strengthened during
2013, boosting employment opportunities throughout the economy.
"Recent GDP and labour market statistics show the Scottish economy growing
faster than the UK over the year to quarter two and employment levels up by 83,000 over the year.
"There will still be challenges for firms in specific industries and for some households as the recovery progresses.
"There will be no let-up in the Scottish Government's commitment to securing economic growth, which is why in this spending review period we are investing £10 billion in capital projects, building homes, schools and facilities to support the economy.
"As 'Scotland's Future' outlines, it is only with the full powers of
independence that we can build a wealthier, fairer and economically sustainable Scotland ensuring that everyone benefits from our natural wealth and talent."