Switzerland: After promising 2018, growth likely to slow in 2019 - ING

Charlotte de Montpellier, economist at ING, notes that the Swiss GDP increased by 2.5% in 2018 as a whole, marking its best result since 2014 but was mainly driven by foreign trade.

Key Quotes

“Domestic demand remained weak, particularly with private consumption held back by a weak trend in purchasing power.”

“After the good momentum in late 2017, the promising 2.5% growth rate in 2018 came after a fluctuating year with an exceptional first half with 0.9% and 0.7% QoQ growth in Q1 and Q2, but the second part of the year disappointing considerably.”

“For 2019, we expect Swiss growth to continue to slow down to a rate of around 1.1%, well below the performance of 2018.”

“There are numerous risks weighing on the global economy, some of which are already affecting confidence at Swiss companies, which is likely to lead to a slowdown in investments in 2019.”

“We believe that private consumption will continue to grow at a slower pace in 2019. Nominal wage growth is expected to remain weak, but lower inflation should allow real wages to rise more than in 2018 and enable consumption growth to remain above 1% in 2019, contributing half of GDP growth.”

“But having said that, like the eurozone, we can't rule out that growth in Q1 might actually end up being better than what confidence indicators suggest.”

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