Switzerland: Economy accelerates in first quarter
May 30, 2013
In the first quarter, GDP expanded a seasonally adjusted 0.6% over the preceding period, which represents an acceleration compared to the revised 0.3% increase observed in the fourth (previously reported: +0.2% quarter-on-quarter). The reading surprised market analysts, who had expected that GDP would increase 0.2%. Compared to the same period last year, GDP grew 1.1% in Q1, which followed a 1.4% increase in Q4.
The quarterly figure was mainly the result of strong growth in domestic demand. Private consumption grew 0.6% in Q1, although it marked a slowdown from the 1.1% increase seen in Q4. On the other hand, government spending contracted 0.9% in the first quarter, contrasting an increase of the same magnitude in the fourth. While fixed investment dropped 0.3% in Q1 (Q4: +0.2% qoq), total investment swung from a 5.2% contraction in Q4 to a 1.3% expansion in Q1, amid a sharp restocking of inventories. Quarterly growth figures are strongly affected by chronically volatile inventories, as Switzerland has become an important commodity trading hub.
On the external front, exports of goods and services slipped 1.2% over the previous period, which contrasts the 1.8% increase observed in Q4. Imports fell 1.7% in Q1, contrasting the 0.9% increase recorded in Q4. As a result, the net contribution from the external sector to overall economic growth deteriorated from 0.6 percentage points in the fourth quarter to 0.1 percentage points in the first quarter.
The State Secretariat for Economic Affairs (SECO) expects the economy to expand 1.3% in 2013, before accelerating to 2.1% in 2014. Meanwhile, the Swiss National Bank sees economic growth averaging between 1.0% and 1.5% in 2013. FocusEconomics Consensus Forecast panellists expect GDP to expand 1.2% in 2013, which is up 0.1 percentage points from last month's projection. For 2014, the panel expects economic growth to accelerate slightly to 1.6%.
Author: Ricardo Aceves, Senior Economist