GDP forecast based on semantic business cycle identification

Release 2018-11-14
    Figure 1: Business cycle indicator based on semantic identification in comparison to real GDP: Ex-ante forecast properties  



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Forecast update. The «KOF surprise indicator» for measuring Swiss economic dynamics flags a healthy expansion of Swiss value added. Its latest reading of -0.014 (up from a revised -0.021) comes close its last high recorded one year ago.
Based on this upbeat finding the latest estimate for Swiss real GDP year-on-year growth amounts to 3.5 percent, after 2.9 percent three months ago.
    Table: Swiss real gross domestic product with forecast  

Year-to-year growth (%) of Swiss real gross domestic product (GDP)
fitted / forecast
standard error
seco estimates*

Sources: Own calculations, forecast for 2018(3), fitted values otherwise, *seco releases (left: May 31, 2018, right: September 6, 2018).

Sample: 2000 (2) - 2018 (2), Forecast: 2018 (3)

Note: Forecast obtained by best nowcasting model.


Outlook. During the past six months the Swiss economy has enjoyed strong tailwind from domestic investment, a comparatively weak currency, strong export demand and robust consumption. On top of all this, the re-structuring of the economy in the wake of the currency shock seem to pay a decent dividend.

  At the same time neither increased tariffs, fiscal and legal struggles within the European Union with their latent crisis potential, nor the German carmakers' drop in output due to the diesel scandal could hamper Swiss economic performance.  

  Beyond this rosy picture, some clouds are clearly visible, however. Today, Germany has posted its first quarterly loss in output in three years, Italy's budget crisis remains unresolved, the US trade policy concerns have not yet faded and overblown real estate prices in Switzerland pose a permanent threat to domestic financial stability.  

   Finally, seco's most recent data revision may not only have resolved the puzzle of 2017's weak growth but has probably also drawn a little too optimistic picture of the first half of 2018. Consequently, the current economic boom may be strong and robust but not as strong and as robust as the official figures suggest.  
Previous update
Standard error of regression*
Business cycle data (csv) download
History 2018-08-15 release
  2018-05-25 release
  Complete release history
  First release
Next release 2019-02-16
    *Standard error of regression refers to baseline model published in the first release.  

Special feature: Severe data revision. Each summer, the Swiss State Secretariat for Economic Affairs (seco) swaps its indicator-based preliminary estimates of previous year's GDP figures for the first data release by the Federal Statistical Office (FSO). Each summer, this move re-writes the recent economic history; sometimes more so and sometimes less. The summer 2018 stands out, however, because all previous revisions pale against the 0.5 percentage point boost to annual growth. Even more strikingly, this revision not only exceeds the correction owed to the great recession of 2009, it is also the revision that many did see coming.

Read here what caused the seco revision, to what extent seco's early, imprecise estimates affect GDP nowcasting and why the «KOF surprise indicator» made sure that neither the revision nor its extent came as a surprise.