Oil prices are expected to lead to a slower growth rate in 2006

However, the Bank of Scotland's Index of Leading Economic Indicators showed that the economy will grow at an above average rate for the rest of this year.

The study showed Scottish consumers and businesses expressing pessimism for the first time in 11 months.

But the report also said share prices and the number of new house building projects continued to rise.

Early signs

It added that the recent interest rate cut should also prove positive.

Tim Crawford, group economist at Bank of Scotland, said: "After enjoying above average growth in 2005, the pace of economic growth seems set to slow slightly in the first half of 2006, hindered by the higher oil price.

"Early signs are that any slowdown in the growth rate will be a relatively modest one, with the recent interest rate cut proving positive and the housing sector still growing.