Switzerland GDP Q1 2021


Switzerland: GDP records sharpest contraction since Q2 2020 in the first quarter

June 1, 2021

GDP declined 0.5% on a seasonally-adjusted quarter-on-quarter basis in the first quarter, contrasting the 0.1% expansion logged in the fourth quarter of last year. Q1's reading marked the sharpest contraction since Q2 2020, with the economy held back by tougher Covid-19 restrictions for most of the quarter.

Private consumption contracted 3.3% in Q1 (Q4 2020: -1.4% s.a. qoq), due to the closure of non-essential shops and the hospitality sector. Meanwhile, government spending growth moderated to 1.2% in Q1 (Q4 2020: +3.0% s.a. qoq), and fixed investment fell 0.2% (Q4 2020: +0.6% s.a. qoq) amid lower investment in equipment and software.

Growth in exports of goods and services improved to 3.2% in seasonally-adjusted quarter-on-quarter terms in the first quarter (Q4 2020: +1.3% s.a. qoq). In particular, goods exports returned to growth on strong demand from key trading partners such as the U.S. and China. In addition, imports of goods and services rebounded, growing 4.5% in Q1 (Q4 2020: -2.8% s.a. qoq).

On an annual basis, economic activity contracted 0.5% in Q1, up from the previous period's 1.6% fall.

A recovery should ensue from Q2 onwards thanks to the loosening of restrictions and the vaccine rollout. Moreover, sporting events such as the Olympics and European Football Championships to be held this summer will provide a further boost to GDP, as many international sporting organizations are headquartered in Switzerland. However, the breakdown in negotiations with the EU over an updated trade partnership could keep a lid on investment intentions.

On EU relations, Charlotte de Montpellier, economist at ING, commented:

“Switzerland’s recent decision to terminate the negotiations on a framework agreement with the EU […] is a headwind in the longer run. The EU is Switzerland’s largest trading partner and accounts for around 42% of Switzerland’s exports in goods and 50% of its imports. […] For the time being, the existing bilateral agreements remain in place. However, without the framework agreement, the EU will not update them when it changes its own rules, leading to a gradual loss of access to the single market for Swiss businesses.”

FocusEconomics Consensus Forecast panelists project the economy to expand 3.3% in 2021, which is up 0.1 percentage points from last month’s forecast. In 2022, the panel expects GDP to grow 2.8%.

Author:, Economist

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Switzerland GDP Chart

Switzerland GDP Q1  2021   Copy 1

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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