Switzerland: Economic growth steady in Q1
May 31, 2018
The economy of Switzerland started the year on strong footing. According to data released by the State Secretariat for Economic Affairs (SECO) on 1 June, seasonally-adjusted economic growth came in at 0.6% on a quarter-on-quarter basis in the first quarter. Q1’s print matched the previous quarter’s expansion and surpassed analysts’ expectations of a slightly softer 0.5% expansion.
Growth in the first quarter was buttressed by a solid expansion in the domestic economy. Private consumption growth in Q1 went up from 0.2% quarter-on-quarter in Q4 to 0.4%. The expansion was underpinned by a solid labor market and higher wages. Fixed investment rebounded from a 0.4% drop in the final quarter of 2017 to a sharp 2.0% expansion. The recovery in fixed investment reflected a surge in fixed assets and software, which more than offset declining investment for construction. Government consumption, however, swung from a 0.5% expansion in the fourth quarter to a 0.3% contraction in the first quarter.
The external sector had a disappointing performance in the first quarter despite a weaker currency in the January-to-March period. Exports of goods and services plunged 0.9% in Q1, contrasting the revised 2.7% increase (previously reported: +2.6% quarter-on-quarter) recorded in the preceding quarter. Meanwhile, imports of goods and services expanded 1.5%, a swing from the sharp 5.6% contraction recorded in the fourth quarter. The turnaround in imports was driven by higher imports of chemical and pharmaceutical products, and vehicles and machinery.
On an annual basis, economic growth improved in the first quarter to 2.2%—the fastest pace in almost four years and a half and exceeding the 1.9% expansion recorded in the fourth quarter.