Consumption in Switzerland

Switzerland - Consumption

Economy rebounds in Q2 as restrictions are lifted

Economic activity rebounded, growing 1.8% on a seasonally-adjusted quarter-on-quarter basis in the second quarter, contrasting the 0.4% contraction recorded in the first quarter. The reading was supported by the progressive lifting of restrictions throughout Q2, and means the economy is now close to its pre-pandemic level.

Private consumption increased 4.1% in the second quarter as the hospitality sector reopened, which contrasted the first quarter's 3.1% contraction. Public spending grew at the fastest pace on record, expanding 5.5% (Q1: +2.4% s.a. qoq). Fixed investment rebounded, growing 1.1% in Q2, contrasting the 0.4% decrease logged in the prior quarter.

Exports growth softened to 1.4% in Q2 (Q1: +3.9% s.a. qoq) amid weaker goods exports momentum more than offsetting stronger services exports. In addition, imports deteriorated, contracting 3.1% in Q2 (Q1: +4.7% s.a. qoq) on lower goods imports more than offsetting healthier services imports. The trade data likely reflected consumers at home and abroad pivoting towards greater spending on services as restrictions were eased.

On an annual basis, economic growth clocked 7.7% in Q2, contrasting the previous period's 0.7% contraction.

Economic momentum should remain robust in H2 despite the recent rise in Covid-19 cases, as consumers continue to spend. However, supply-side constraints could keep a lid on the manufacturing industry.

On the economy, Charlotte de Montpellier, economist at ING, commented:

“At the end of the second quarter, the Swiss economy was 0.5% below its pre-crisis level of activity, an exceptional performance compared to neighbouring countries. For example, the euro area was at the same time 3% below its pre-crisis level of activity. […] The third quarter of 2021 should signal a return to and surpassing of the pre-crisis level of activity for the Swiss economy. The small, open economy is benefiting strongly from the global recovery on the one hand. On the other hand, with the consumer confidence indicator having reached its highest level since 2010 in July and the labour market in good shape, this suggests that domestic consumption should continue to recover.”

FocusEconomics Consensus Forecast panelists project the economy to expand 3.6% in 2021, which is up 0.1 percentage points from last month’s forecast. In 2022, the panel expects GDP to grow 2.9%.