Switzerland: stronger and broader growth

After posting its fastest growth rate in almost three years in the third quarter, the Swiss economy is set to accelerate in 2018.

According to the State Secretariat for Economic Affairs (SECO), Swiss real GDP expanded by 0.6% quarter-on-quarter (q-o-q) in Q3 2017, in line with consensus expectations and our own forecasts. This comes after several quarters of poor performance. As we mentioned in our previous Flash Note, the downturn in previous GDP figures was exacerbated by special statistical effects related partly to the inclusion of sports events in the “Art, entertainment, recreation and other services” sector. GDP data appear now more in line with what is signalled by monthly indicators.

Overall, Switzerland still lags the US and the euro area in terms of GDP growth, but today’s data confirm that the Swiss economy is continuing its recovery. Importantly, surveys and hard data suggest that activity is becoming more broad-based across sectors. The economy is set to benefit from the global economy’s solid momentum, all the more so if the Swiss franc depreciates further. As a result, 2018 GDP growth is likely to edge closer to 2% in Switzerland, up from about 1% in 2017.

Over the coming quarters, Swiss exports are set to benefit from the global economy’s solid momentum, all the more so if the Swiss franc depreciates further. Surveys suggest that activity is becoming more broad-based across sectors, with the watch making and machinery and equipment industry recovering from the slump of recent years.

Domestic demand is expected to gain momentum as well. Specific factors such as sports events will also have a favourable impact on GDP growth. As a result, 2018 GDP growth is likely to edge closer to 2% in Switzerland, up from about 1% in 2017.

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