Whereas the Swiss economy benefited from a sharp increase in exports and enjoyed strong growth in the second quarter, foreign trade momentum has weakened considerably in recent months. In September, export volumes were down around 9 percent year-on-year. In particular, declining demand for Swiss watches in overseas markets such as China made itself felt. However, there are more positive signals from domestic demand. Retail sales, for example, have returned to a solid growth path, while Swiss service providers are also reporting a good business climate. There is still a question mark over consumer confidence, which has continued to deteriorate recently and is at a level normally seen during periods of pronounced weakness.

Growth, sentiment and trend

In percent

The US economy appears to be maintaining its strong growth for the time being. Expanding by 0.7 percent in the third quarter, it was again above its long-term trend, and the economic indicators also point to robust growth at the start of the fourth quarter. One striking aspect is that American households’ willingness to consume remains high, despite the fact that income growth has weakened significantly over the course of the year. However, industry and the construction sector remain the economy’s Achilles’ heel, with companies in both sectors continuing to anticipate a significant decline in business activity. On top of that, there was again no progress in efforts to tackle inflation. Core inflation also remained at 3.3 percent in October.

Growth, sentiment and trend

In percent

The eurozone economies grew by an average of 0.4 percent in the third quarter, slightly more strongly than expected. However, given the ongoing stagnation in Germany, Europe’s largest economy, there is no sustained overall economic recovery in sight, particularly as the German government’s current political crisis is unlikely to accelerate any upturn. That said, economic sectors geared towards domestic demand have shown a slight improvement recently. Retail sales grew significantly in September, and consumer confidence is also seeing a gradual increase. October’s policy rate cut by the European Central Bank (ECB), its third this year, is expected to provide further relief and bolster overall economic demand.

Growth, sentiment and trend

In percent

China, the emerging markets’ biggest economy and the world’s second-largest market, appears to have stalled. Sentiment among companies and consumers continues to fluctuate within the usual range, with no indication of any clear recovery. Industrial production remains at a low level, and, at 0.3 percent, inflation is still only just above zero. In addition, the monetary and fiscal policy measures announced to date are unlikely to be enough to trigger any broad-based upturn. The interest rate cuts are too small and fiscal policy measures are more reminiscent of a debt restructuring from regional to national level than any major effort to stimulate demand. On a positive note, however, retail sales have again stabilized somewhat recently.

Growth, sentiment and trend

In percent