Switzerland GDP Q1 2016


Economy slows in Q1 as exports plummet

In the first quarter, GDP increased 0.1% over the previous quarter in seasonally-adjusted terms, which came in below the 0.4% expansion seen in the fourth quarter and undershot market expectations of a 0.3% increase. The weaker expansion came on the back of a contraction in government consumption and a slump in exports. The deteriorations in these components were offset by a solid increase in private consumption and a rebound in fixed investment. Compared to the same quarter last year, GDP rose 0.7%, which was above the previous quarter’s 0.3% increase.

The domestic sector’s contribution to growth was healthy in Q1, despite a cutback in government consumption. Private consumption grew 0.7%, which was a remarkable acceleration from the 0.1% increase tallied in the previous quarter. Conversely, government consumption decreased 0.8%, which contrasted the strong 1.2% expansion seen in Q4 and was the largest cutback in six years. Moreover, fixed investment expanded 1.7% in Q1, which was an upswing from the 0.6% decrease observed in the previous quarter and marked the strongest result since Q4 2012.

On the external side of the economy, exports of goods and services contracted 5.9% over the previous quarter, which was a sharp deterioration over Q4’s 3.2% increase. Moreover, imports decelerated from a 3.5% increase in the fourth quarter to a 1.6% expansion in the first quarter. As a result, the external sector’s net contribution to growth deteriorated sharply from a 0.3-percentage-point contribution in Q4 to a 5.2-percentage-point detraction in Q1. This marked the worst result in seven years.

The State Secretariat for Economic Affairs (SECO) expects GDP to expand 1.4% in 2016. For 2017, SECO sees economic activity strengthening and expects GDP to expand 1.8%. Meanwhile, the Swiss National Bank expects economic growth of between 1.0% and 1.5% in 2016. FocusEconomics Consensus Forecast panelists expect GDP to expand 1.2% in 2016, which is unchanged from last month’s projection. For 2017, the panel expects economic growth to accelerate to 1.6%.

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Switzerland GDP Chart

Switzerland GDP Q1 2016 3

Note: Quarter-on-quarter changes of seasonally- and working-day adjusted GDP and year-on-year variation in %.
Source: State Secretariat for Economic Affairs (SECO) and FocusEconomics Consensus Forecast.

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