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Swiss GDP still going strong |
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Release 2022-08-17 |
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Figure: Business cycle indicator and Swiss GDP with forecast |
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Forecast update. On the back of rising energy prices, the war in Ukraine and lasting Covid-19 impact the «KOF Surprise Indicator» drops to -0.026 (down from -0.009, revised) indicating still strong yet much weaker expansion of Swiss GDP to the tune of 2 percent y-o-y in 2022, second quarter. |
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Table:
Swiss real gross domestic product with
forecast |
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Date |
Year-to-year growth (%) of
Swiss real gross domestic product (GDP) |
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fitted / forecast |
standard error |
seco estimates* |
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2021(4) |
1.89 |
- |
3.72 |
3.65 |
| 2022(1) |
2.72 |
- |
- |
4.44 |
| 2022(2) |
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0.67 |
- |
- |
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Sources: Own calculations, forecast
for 2022(2), fitted values otherwise, *seco releases (left: February 28, 2022, right: May 30, 2022).
Sample: 2000 (2) - 2022 (1),
Forecast: 2022 (2), SECO data
Note: Forecast obtained by best
nowcasting model. |
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Nowcast.
The war in Ukraine with rising energy prices, inflation staging an unwelcomed comeback and strong afterglows of the Covid-19 crisis Swiss value added growth shows clear signs of slowing down in the second quarter. |
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The latest reading of the «KOF Surprise Indicator» suggests that GDP grew by 2.1 percent in the second quarter when compared to the same period a year earlier. |
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Outlook.
In response to adverse news from price data the Swiss National Bank hiked rates even prior to its European counterpart. Adding a significant sell-off of parts of its portfolio the Swiss Franc could not but appreciate. |
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While cheaper imports help stem inflationary pressures, higher interest rates and a stronger currency will very likely contribute to further slowing down the economy. |
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The hot summer sees water levels of the Rhine river fall to dangerously low levels impeding cross-border trade which will not benefit domestic production. Finally, uncertainties nurtured by the ongoing war round up the rather gloomy outlook. |
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Special feature: Swiss National Bank. The Swiss National Bank adopted its current strategy back in 2000. Meanwhile, basically all of its pillars such as the «main instrument», repos, have disappeared or lost their meanings. |
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At the same time, pressing questions such as how to manage the huge balance sheet and the exchange rate have entered the scene and await answers. |
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Therefore, the SNB is in for a general overhaul of its strategy. It should seize this opportunity to also update its theoretical framework. Read more» |
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*Standard error of regression refers
to baseline model published in the first release. |
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Quarterly
nowcast update. Order your free personal quarterly email
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indicator». Subscribe here»
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