Domestic Demand in Switzerland
Switzerland - Domestic Demand
Economy recovers modestly in Q4 2018
According to data released by the State Secretariat for Economic Affairs (SECO) on 28 February, the Swiss economy grew 0.2% in Q4 2018 over the previous quarter in seasonally-adjusted terms, rebounding from the revised 0.3% contraction recorded in Q3 (previously reported: -0.2% quarter-on-quarter). In annual terms, GDP expanded 1.4% in Q4, down from the 2.4% expansion logged in Q3 and missing market expectations of 1.7% growth. Q4’s print puts annual GDP growth at 2.5% in 2018, markedly up from 2017’s 1.6% reading.
Q4’s recovery came largely on the back of a surge in manufacturing production and a positive contribution from the external sector. Looking at a breakdown by expenditure, the data paints a more mixed picture, however. Private consumption growth accelerated in the quarter amid a tight labor market, and partly due to higher healthcare spending (Q4: +0.3% qoqsa; Q1: +0.1% qoqsa). Meanwhile, government spending recovered marginally in Q4 (Q4: +0.1% qoqsa; Q3: -0.1% qoqsa). Conversely, fixed investment continued to decline, albeit at a softer pace, falling 0.8% on the back of a sharp drop in equipment investment and a dip in construction investment (Q3: -1.3% qoqsa). Overall, domestic demand flatlined in Q4 (Q3: -0.3% qoqsa).
Looking at the external economy, exports plummeted 3.1% quarter-on-quarter in Q4 (Q3: +0.2% qoqsa), weighed on by the slowdown in the EU and softer global trade dynamics. Meanwhile, imports of goods and services plunged to a four-and-a-half-year low due in part to sluggish domestic demand (Q4: -7.5% qoqsa; Q3: +3.3% qoqsa). Despite significant weakness in external demand, the sharp decline in imports led to a positive contribution to the headline GDP print.
Although the overall yearly expansion was strong, the economy cooled considerably in the second half of 2018 and momentum is expected to continue to dissipate in 2019. Mounting headwinds from a slowdown in the Euro-area and a more challenging global trade environment in general will likely drag on the highly open economy. Already, the KOF economic barometer, an indicator of growth prospects in the short-term, pointed to below-average growth in January and February.
Commenting on the outlook, Charlotte de Montpellier, an economist at ING noted:
“Growth should continue to slow in 2019. The global growth deceleration will probably weigh on Swiss exports. The numerous risks weighing on the global economy are already affecting confidence at Swiss companies, which should lead to a slowdown in investments in 2019. […] The question now is whether in 2019 Switzerland will be able to maintain a growth rate higher than that of the eurozone. We believe that this will be difficult”.
The State Secretariat for Economic Affairs expects the economy to expand 1.5% in 2019 and 1.7% in 2020. Met the why particular Consensus Forecast panelists also expect GDP to expand 1.5% in 2019, which is down 0.1 percentage points from last month’s forecast, and project growth of 1.6% in 2020.
Switzerland - Domestic Demand Data
|Domestic Demand (annual variation in %)||-0.7||2.5||2.4||0.4||0.2|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||-0.29||6.27 %||Jan 30|
|Exchange Rate||0.99||-0.54 %||Jan 30|
|Stock Market||8,966||-0.82 %||Jan 30|
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April 2, 2019
Consumer prices increased a sharp 0.5% over the previous month in March, up from the 0.4% rise registered in February.
Switzerland: Manufacturing PMI plunges to over four-year low in March; services sector also loses momentum
April 1, 2019
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch tumbled to an over four-year low of 50.3 points in March from 55.4 points in February.
April 1, 2019
According to the Swiss Federal Statistics Office, calendar-adjusted real retail sales fell 0.2% in annual terms in February, matching January’s revised 0.2% dip (previously reported: -0.4% year-on-year).
Switzerland: KOF economic barometer rebounds in March, but continues to signal below average growth in the months ahead
March 29, 2019
The KOF economic barometer—a leading composite indicator for the Swiss economy forecasting a six-month period—rose to 97.4 points in March from a revised 93.0 points in February (previously reported: 92.4 points), ending five months of consecutive declines.
March 21, 2019
At its meeting on 21 March, the Swiss National Bank (SNB) confirmed it would continue maintaining its current expansionary policy stance into 2019.