Switzerland: Pace of economic growth slows in Q4 on dragging external sector
February 27, 2014
In the fourth quarter, GDP increased 0.2% over the previous quarter in seasonally-adjusted terms. The reading came in below the 0.5% expansion observed in the third quarter and the 0.4% increase the market had expected. Compared to the same quarter of the previous year, GDP slowed from a 2.1% increase in Q3 to a 1.7% expansion in Q4, which undershot market expectations of a 2.0% increase.
Q4's slowdown was driven by the external sector dragging down growth. Exports of goods and services increased 0.9% in Q4, which was above the flat reading tallied in Q3. Imports swung from a 1.1% contraction in Q3 to a 3.5% expansion sin Q4. Consequently, the external sector's net contribution to overall economic growth swung from a 0.5 percentage-point contribution in Q3 to a 1.0 percentage-point detraction in Q4.
On the domestic side of the economy, private consumption grew a healthy 0.7% in Q4, up from a 0.2% expansion in Q3. Conversely, government spending decelerated from a 1.2% increase in Q3 to a 0.6% rise in Q4. Meanwhile, gross fixed investment expanded 1.5% in the fourth quarter, which was stronger than the 0.5% increase tallied in Q3.
In the full year 2013, the economy grew a healthy 2.0%, which was up from the 1.1% expansion observed in 2012. The State Secretariat for Economic Affairs (SECO) expects growth to pick up this year and for GDP to expand 2.3%. For 2015, SECO expects the economy to grow 2.7%. Meanwhile, the Swiss National Bank expects economic growth of around 2.0% in 2014.
FocusEconomics Consensus Forecast panelists expect GDP to expand 2.1% in 2014, which is unchanged from last month's projection. For 2015, the panel expects economic growth to accelerate slightly to 2.2%.
Author: Ricardo Aceves, Senior Economist