Swiss economic data has fluctuated significantly over recent months. That applies to sentiment values for the service and industrial sectors as well as figures on real economic activity. In May, there was a significant uptick in the business activity of the export-oriented industrial sector, after dropping to a remarkably low level in April. The overall picture for the Swiss economy remains weak, though, and there’s no rapid recovery in sight. This means economic output per capita – which hasn’t risen for two years – looks set to continue stagnating. One positive side-effect of the economic weakness is that core inflation has now stabilized at between 1 and 1.5 percent, moving to within the Swiss National Bank’s (SNB) target range.
Economic situation: growth on hold
There’s still no sign of any clear direction in the global economy. While the most recent US economic data was generally weaker, the outlook for the European economy has improved slightly. The gradual recovery in momentum of global trade in goods is striking, though, and most economies recorded a sharp upturn in foreign trade in May. This underlines our view that the global goods cycle has bottomed out.
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Growth, sentiment and trend
In percent
Source: Bloomberg -
Economic news from the USA was generally weaker again in May. Growth estimates for the first quarter of 2024 were corrected downwards, and sentiment among both industrial companies and consumers deteriorated markedly. Economic development nevertheless remains stable overall. In particular, this is reflected on the labour market: almost 300,000 new jobs were created in May, which significantly exceeded market expectations, while strong wage growth continued, too. In this climate, concerns about inflation persist for the time being. This means the US Federal Reserve is unlikely to make an initial cut in interest rates yet.
Growth, sentiment and trend
In percent
Source: Bloomberg -
Tentative signs of economic recovery in the eurozone were confirmed last month. Sentiment among companies continues to improve, while industrial production and goods exports appear to be gradually stabilizing. However, many economic activity indicators remain below the previous month’s level, highlighting just how weak economic development has been of late. More attention is now being focused on inflation again. The core rate climbed from 2.7 to 2.9 percent in May, interrupting its downward trend. Unchecked price rises in the services sector are a growing cause for concern. The European Central Bank (ECB) nevertheless decided to relax its monetary policy in June again for the first time in this cycle. It cut its policy rate by 25 basis points to 4.25 percent (= main refinancing rate).
Growth, sentiment and trend
In percent
Source: Bloomberg -
There has been positive news recently from many major emerging markets. India, Brazil and Indonesia achieved stronger growth in the first quarter than market participants had expected. By contrast, China – the biggest emerging market economy by some distance – continued to perform far more sluggishly. Sentiment figures among Chinese companies and consumers have still not recovered, while prices continued to plunge on the real estate market. Inflation also remained exceptionally low. With no prospect of any major fiscal or monetary policy support measures from the government, growth momentum in the Chinese economy appears limited to the export sector at the moment. Goods exports, at least, rose sharply in May.
Growth, sentiment and trend
In percent
Source: Bloomberg
Global economic data
| Indicators | Switzerland | USA | Eurozone | UK | Japan | India | Brazil | China |
|---|---|---|---|---|---|---|---|---|
| Indicators GDP Y/Y 2023Q4 |
Switzerland 0.5% |
USA 3.1% |
Eurozone 0.2% |
UK –0.2% |
Japan 1.0% |
India 8.6% |
Brazil 2.1% |
China 5.2% |
| Indicators GDP Y/Y 2024Q1 |
Switzerland 0.6% |
USA 2.9% |
Eurozone 0.4% |
UK 0.2% |
Japan –0.2% |
India 7.8% |
Brazil 2.5% |
China 5.3% |
| Indicators Economic climate |
Switzerland – |
USA – |
Eurozone = |
UK + |
Japan + |
India = |
Brazil = |
China + |
| Indicators Trend growth |
Switzerland 1.3% |
USA 1.6% |
Eurozone 0.8% |
UK 1.8% |
Japan 1.1% |
India 5.2% |
Brazil 1.6% |
China 3.8% |
| Indicators Inflation |
Switzerland 1.4% |
USA 3.3% |
Eurozone 2.6% |
UK 2.3% |
Japan 2.5% |
India 4.8% |
Brazil 3.9% |
China 0.3% |
| Indicators Policy rates |
Switzerland 1.25% |
USA 5.5% |
Eurozone 4.25% |
UK 5.25% |
Japan –0.1% |
India 6.5% |
Brazil 10.50% |
China 3.45% |
Source: Bloomberg