BERN – The Swiss economy grew faster in the past year than initially estimated. However, the current year is characterized rather by moderate growth.
If trade flourishes worldwide, the Swiss economy will do well, too. That can be said also with a view to 2018.
Supported by the revival in foreign trade and strong dynamism in industry, the country’s gross domestic product (GDP) grew by 2.8 percent in real terms according to FSO figures, as can be seen from the national accounts published on Tuesday by the Federal Statistical Office (FSO). Previous estimates by the State Secretariat for Economic Affairs (Seco) had only assumed 2.6 percent.
The good economic momentum also contributed to a 2.4 percent increase in labor productivity in 2018. Thus, the growth in labor productivity – the strongest since 2010 – was above 2 percent for the second time in a row.
GDP performance per capita is not quite as positive due to the positive population growth. According to the figures, GDP per capita rose in real terms by just 2.0 percent and nominally by 2.2 percent. It is indicated as just under CHF 81,000 per person.
Tailwind from abroad
Trade with foreign countries boosted the economy last year. The net total in the balance in the trade in goods and services rose by over 17 percent. This was particularly attributable to the strong development in the service balance sheet (net total + 31%), where exports increased and imports decreased.
But, also the net total in the balance on goods experienced a high increase by 12 percent. Here exports developed more dynamically than imports. Especially medicaments, precision instruments, optical devices and watches enjoyed good demand abroad. Yet commodities trading also contributed to the good balance sheet.
Slowdown in 2019
The FSO slightly revised also the figures for the two previous years. According to the new figures, GDP grew by 1.7 percent in real terms in 2016 and by 1.8 percent in 2017. The two values were corrected upwards by 0.1 and 0.2 percentage points, respectively.
Regarding the high growth of the past year, it should be noted that in 2018 Switzerland benefited from license incomes from important international sporting events, such as the FIFA World Cup in Russia or the Olympic Games in South Korea. Switzerland is home to the world football association FIFA and the International Olympic Committee (IOC).
In view of the global economic situation, there is now a clear slowdown for the current year. The seething trade dispute between the world’s largest economies, the USA and China, is afflicting the global economy. Switzerland’s most important trading partner, Germany, could even slide into a recession.
Against this background, the Seco, for example, is expecting the Swiss GDP to grow by only 1.2 percent this year, while the expectations of economists from banks such as UBS, CS or institutes such as the economic research center KOF range between 1.1 to 1.6 percent.