Switzerland GDP Q2 2016


Switzerland: Economy picks up in Q2 on the back of a rebound in the external sector

September 6, 2016

Switzerland’s economy gained steam in the second quarter, growing at the highest rate since Q4 2014. Since the Swiss National Bank gave up the EUR-CHF cap in January 2015, a strong franc had impeded growth in the export-reliant economy.

GDP grew 0.6% in Q2 over the previous quarter in seasonally-adjusted terms, according to the State Secretariat for Economic Affairs (SECO). The result came in above the 0.4% expansion seen in Q1 and overshot market expectations of a 0.4% increase. The acceleration was driven by healthy government consumption and a rebound in exports. Compared to the same quarter last year, GDP rose 2.0%, which was above Q1’s 1.1% annual growth.

The domestic sector’s contribution was a mixed picture. Private consumption recorded flat growth, which was a slowdown from the 0.5% increase seen in the first quarter. Government consumption in turn picked up pace and grew 1.7% in Q2, which was the highest result in over seven years (Q1: +0.2% quarter-on-quarter). The solid reading was driven by increased spending for education and social security transfers, a representative from SECO explained. Fixed investment declined 0.7% in Q2, which contrasted the 2.2% rise observed in the previous quarter.

On the external side of the economy, exports of goods and services increased 4.6% over the previous quarter, which was a strong rebound over Q1’s 3.2% decrease. Imports fell from a mild 0.3% increase in the first quarter to a 3.3% contraction in the second. As a result, the external sector’s net contribution to growth improved remarkably from a 2.8 percentage-point detraction in Q4 to a 5.2 percentage-point contribution in Q2. This marked the best result in three years.

The 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 1.1% in 2016, which is unchanged from last month’s projection. For 2017, the panel expects economic growth to accelerate to 1.4%.

Author: Marlène Rump, Senior Data Analyst

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Switzerland GDP Chart

Switzerland GDP Q2 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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