Switzerland: Economy unexpectedly contracts in second quarter
September 4, 2012
In the second quarter, GDP declined 0.1% over the previous quarter in seasonally adjusted terms. The reading contrasted the revised 0.5% increase observed in the first quarter and marked, in fact, the first drop in economic activity since the third quarter of 2011. In addition, the reading surprised market analysts on the downside, as they had expected the economy to grow 0.2%. Compared to the same period last year, economic growth slowed from a 1.2% increase in the first quarter to a 0.5% expansion in the second, the slowest pace recorded since the last quarter of 2009. On the domestic front, private consumption grew 0.3% in the second quarter, which was well below the 0.9% expansion recorded in the first quarter. Government consumption bounced back and grew a strong 1.0% in Q2, which contrasted the 0.4% declined observed in Q1. Meanwhile, fixed investment recorded zero growth in the second quarter (Q1: +0.2% qoq). That said, a destocking process caused total investment to plummet 2.2% over the previous quarter. Exports of goods and services increased 0.4% in the second quarter, which contrasted the 0.2% decline recorded in the first. Within exports, the closely watched sub-category of exports of goods excluding precious metals, jewellery and gems, fell 0.7% in Q2, which followed the 0.5% drop recorded in Q1. Meanwhile, imports of goods and services expanded 0.2% in Q2, which followed an increase of the same magnitude in Q1. As a result, the net contribution from the external sector to overall economic growth improved from minus 0.2 percentage points in Q1 to plus 0.1 percentage points in Q2.
Author: Ricardo Aceves, Senior Economist