Switzerland Disposable Income (ann. var. %)

Economy records worst reading since Q1 2021 in the fourth quarter

GDP was flat on a seasonally adjusted quarter-on-quarter basis in the fourth quarter, below the 0.2% expansion logged in the third quarter. Q4’s reading marked the worst result since Q1 2021, and took the expansion for 2022 as a whole to 2.1%.

Private consumption growth moderated to 0.3% seasonally-adjusted quarter-on-quarter in Q4 compared to a 0.6% expansion in Q3. Rock-bottom unemployment likely cushioned private spending in the face of higher inflation. Government spending ticked up to a 0.3% increase in Q4 (Q3: +0.2% s.a. qoq). Meanwhile, fixed investment growth accelerated to 1.0% in Q4, compared to the 0.3% expansion logged in the previous quarter. Equipment investment was boosted by easing supply bottlenecks in the auto sector, although construction investment contracted, likely weighed on by rising interest rates.

Exports of goods and services fell 2.0% on a seasonally adjusted quarterly basis in the fourth quarter, which was below the third quarter’s 15.6% expansion. While services exports exhibited continued strong growth thanks to recovering tourism, goods exports fell. In addition, imports of goods and services growth moderated to 0.5% in Q4 (Q3: +10.4% s.a. qoq).

On an annual basis, economic growth lost momentum, cooling to 0.8% in Q4, following the previous quarter’s 1.0% increase. Q4’s reading marked the slowest expansion since Q1 2021.

On the outlook, Credit Suisse’s Franziska Fischer said:

“We remain confident that recession risks are moderate for Switzerland […]. With the unemployment rate at its lowest level in two decades, Swiss consumers likely consider their jobs are secure and continue spending. In addition, recruitment difficulties have spurred immigration, another pillar of private consumption. And real wages should increase again as inflation slows, supporting household income. Nevertheless, a slowdown seems unavoidable in light of monetary policy tightening, geopolitical uncertainty, and a weak global environment.”