Switzerland: Economic barometer falls for 2nd consecutive month
April 30, 2014
The KOF economic barometer-a leading indicator for future GDP growth-fell from a revised 106.3 points in March (previously reported: 106.1 points) to 102.0 points in April. The reading undershot the 106.0 points the markets had expected and represented the second consecutive fall. Despite the drop, the economic barometer is still above its long-term average of 100 points. In its accompanying statement, the KOF Institute noted that the Swiss economy, “continues to perform well but the increase could be less powerful in the near future,” which suggests that economic growth is likely to weaken in the coming months. The KOF Institute unveiled a new version for the economic barometer (the 2014 version), which, according to the Institute, aims to provide, “maximum possible accuracy in predicting the Swiss business cycle.”
April's result reflected that firms in the manufacturing sector are less optimistic compared to the previous month as their expectations regarding future exports deteriorated. In addition, firms' prospects in the banking sector weakened slightly in April, while expectations in the construction, restaurant and catering sector, as well as in overall consumption, remained broadly unchanged compared to March. The KOF Institute concluded that, “domestic demand is still supporting the economic development.”
The State Secretariat for Economic Affairs (SECO) expects the economy to expand 2.3% in 2014. The Swiss National Bank expects economic growth to reach nearly 2.0% in 2014. FocusEconomics Consensus Forecast panelists expect GDP to expand 2.1% in 2014, which is unchanged from last month's projection. For 2015, the panel expects economic growth to accelerate slightly to 2.2%.
Author: Ricardo Aceves, Senior Economist