Real GDP in Switzerland grew 0.3 percent in Q1 (1.1 percent annualized), undershooting the consensus expectation, which called for 0.5 percent growth, but despite the miss, Q1 growth was the strongest since Q2 2016, explains the research team at Wells Fargo.
Key Quotes
“Household consumption was notably weak, growing just 0.1 percent in Q1. Business investment in equipment and software increased a strong 1.7 percent on the quarter, while construction investment edged up 0.4 percent.”
“Exports (excluding valuables) jumped 3.9 percent on the quarter, following a 3.5 percent pullback in Q4 2016. Likewise, exports of services grew 3.2 percent. Prior to this quarter, Swiss export growth had been lackluster, reflecting slow economic growth in many of Switzerland’s trading partners as well as the appreciation of the Swiss franc. If, as we expect, economies in the Eurozone begin to gain momentum, then Swiss export growth should remain positive.”
“Consumer price inflation in Switzerland emerged from negative territory in January for the first time in more than two years and core CPI followed suit in March; however, both price measures remain dangerously close to slipping back into negative territory. In January 2015, the SNB cut rates deeper into negative territory by reducing its target for three-month Swiss franc LIBOR to -0.75 percent. Although inflation has recently been positive, the Swiss National Bank likely will maintain negative rates for the foreseeable future.”
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