Switzerland: Switzerland's economy accelerates slightly in Q1
June 8, 2017
Switzerland’s gross domestic product accelerated in the first quarter on the back of stronger fixed investment. According to the State Secretariat for Economic Affairs (SECO), GDP increased 0.3% over the previous quarter in seasonally and calendar-adjusted terms in Q1. The print was slightly below the 0.4% increase markets had expected but still marked the highest rate in three quarters. In annual terms, the Swiss economy grew 1.1% in Q1, accelerating from Q4’s 0.7% expansion.
On the domestic side, the picture is mixed. Fixed investment swung from a 0.4% decline in Q4 to a 1.2% expansion in Q1. Investments in equipment and software registered the biggest gain, followed by investment in the construction sector. Total consumption, however, was subpar. Private consumption grew a marginal 0.1%, down from the 0.9% increase in the last quarter of 2016 and marking the slowest rate of expansion in three quarters. According to SECO, private consumption was weak due to higher prices for housing and energy. Government consumption growth slowed to 0.4% (Q4: +0.9% quarter-on-quarter).
In the external sector, export of goods, excluding valuables, recorded 3.9% growth, rebounding from the 3.5% contraction in Q4. On a positive note, watches and jewelry recorded their highest quarter-on-quarter growth in six years. In addition, exports of services grew a robust 3.2%, after falling 1.0% in the previous quarter. However, Switzerland’s total exports, which include shipments of non-monetary gold and other valuables, painted a less positive picture, dropping 7.0% on a quarterly basis (Q4: +3.1% qoq). Total imports fell 3.6% in the first quarter (Q4: +4.6% qoq).
Looking ahead, the outlook for the Swiss economy remains stable. That said, although positive news and data from the euro area have recently taken some pressure off the Swiss franc, it remains strong and weighs on export competitiveness. Moreover, while PMI and Economic Barometer reports suggest upbeat momentum among firms, gloomy consumer confidence and falling retail sales signal pessimism among the majority of Swiss consumers, dragging on the outlook.
Author: Jan Lammersen, Economist