Switzerland: Economy shows strong growth in first quarter
May 31, 2012
In the first quarter, GDP expanded 0.7% over the previous period in seasonally adjusted terms. The print was stronger than the 0.5% increase observed in the fourth quarter and market, in fact, the strongest increase since the third quarter of 2010. In addition, the reading surprised market analysts on the upside, as they had expected economic growth to stall. Compared to the same quarter a year ago, GDP increased 2.0% in the first quarter, which followed and expansion of the same magnitude in the fourth quarter of 2011. The first quarter improvement was primarily the result of strong growth in total consumption (+0.9% quarter-on-quarter), which reflected robust growth in public spending (Q4 2011: -0.2% qoq; Q1 2012: +2.0% qoq) and in private consumption (Q4 2011: +0.6% qoq; Q1 2012: +0.6% qoq). In contrast, gross fixed investment contracted 1.5% over the previous quarter, contrasting the 2.5% expansion tallied in Q4 2011. Exports of goods and services contracted 0.4% in the first quarter, which came in well below the 1.3% increase observed in the final three-month period of 2011. In contrast, imports swung from a 1.9% drop in Q4 2011 to a 2.4% expansion in Q1 2012. As a result, the net contribution to overall economic growth deteriorated from a 1.6 percentage-point contribution in the fourth quarter to a 1.4 percentage-point detraction in the first. According to its March economic outlook, the State Secretariat for Economic Affairs (SECO) expects the economy to expand 0.8% this year and 1.8% in 2013. Meanwhile, the Swiss National Bank expects economic growth to be close to 1.0% this year.
Author: Ricardo Aceves, Senior Economist