Switzerland Economic Forecast

Our panel forecasts a virtual stagnation in Swiss activity in Q3 for the second consecutive quarter. While private consumption likely expanded, aided by low inflation and unemployment rates, a projected decrease in public spending and rebounding imports likely weighed on momentum. Turning to Q4, our Consensus is for economic growth to be minimal in quarter on quarter and annual terms. Looking at available data, the October PMI surveys of private businesses suggest that the service sector performed better than the more export-oriented manufacturing sector, though both indices declined when compared to the previous month. Similarly, the KOF Economic Barometer dipped further below the long-term average of 100 in October, pointing to a moderate near-term outlook for the Swiss economy.

Inflation was stable at September’s 1.7% in October, in line with the Central Bank’s target of less than 2.0%. A softer fall in transport prices perfectly offset lower food and housing price pressures. Inflation should cool in 2024, on past Central Bank rate hikes, slow wage growth, low inflation expectations and lower average commodity prices.