Switzerland: Economy grows at quickest pace on record in Q3
Economic activity soared 7.2% on a seasonally-adjusted quarter-on-quarter basis in the third quarter, contrasting the 7.0% contraction recorded in the second quarter and marking the strongest expansion on record. Switzerland’s economic performance in recent quarters compares favorably to its European peers, with GDP now a mere 2% below its pre-Covid-19 peak.
The upturn reflected recoveries in private consumption, fixed investment and exports as restrictions on activity were lifted at home and abroad. Household spending bounced back, growing 11.9% in seasonally-adjusted quarter-on-quarter terms in Q3, compared to a 8.1% contraction in Q2. Government spending rose 0.2% in Q3 (Q2: 0.0% s.a. qoq). Fixed investment rebounded, growing 7.4% in Q3, following the 8.2% decrease logged in the previous quarter.
Exports of goods and services bounced back, growing 2.9% in Q3 (Q2: -4.7% s.a. qoq). In addition, imports of goods and services rebounded, growing 5.8% in Q3 (Q2: -7.0% s.a. qoq).
On an annual basis, economic activity dropped 1.6% in Q3, up from the previous quarter’s 7.8% decrease.
Digging deeper into Switzerland’s recent economic performance was Charlotte de Montpellier, economist at ING:
“Overall, the recovery of the Swiss economy in the third quarter was very solid. […] The decline observed in the first half of the year was smaller in Switzerland [compared to European neighbors] and the recovery was very dynamic. This can probably be explained by a number of factors. The lockdown measures introduced in the spring in Switzerland were less stringent and lasted for a shorter period of time than in neighbouring countries, allowing for a smaller economic shock. Businesses were probably also helped by a very effective deployment of the aid measures put in place by the government. Finally, Swiss exports of goods suffered less and recovered much better than in other countries such as France. This is probably due to the fact that they are traditionally largely oriented towards the pharmaceutical sector.”
Looking at Q4, the outlook is darker due to tighter lockdown restrictions. However, the slowdown will still be much less marked than in the spring, as measures are still notably looser than at the height of the first lockdown.