Economic sectors geared towards domestic demand are continuing their recovery at the beginning of the new year. Sentiment among Swiss service providers improved markedly in January, and consumer confidence rose moderately again. The latest figures on Swiss consumption are also encouraging. This recovery in the domestic economy comes at a time when export-oriented industries continue to face weak international demand and could come under additional pressure from increased risks in global trade. Besides support from domestic demand, the Swiss franc also provided some relief as it weakened at the beginning of the year, bucking its long-term upward trend.
Economy: Trade war becomes a stress test
Since taking office, Donald Trump has announced a series of punitive tariffs and quickly implemented far-reaching measures. In the short term, this is likely to keep inflationary pressure high, particularly in the USA, where inflation has already been rising recently. At the same time, the new trade barriers are increasing economic pressure – not only on the US economy, but also on China and Europe – and making their economic recovery more difficult. It means the risks for the global economy have risen significantly. Against this backdrop, the Swiss domestic economy appears to be regaining momentum just in time.
Growth, sentiment and trend
In percent
As the latest economic data from the USA shows, growth slowed somewhat in the fourth quarter of last year compared to the two previous quarters, but remains solid at 0.6 percent. The main driver was again consumer spending, in particular on durable consumer goods such as electronics, which grew strongly. The new year also got off to a bright start, with industrial companies in the USA expecting a moderate increase in business activity for the first time in more than two years. However, concerns about inflation have also grown in recent weeks. January saw an unexpected rise in core inflation, while inflation expectations among American households increased significantly in light of President-elect Donald Trump’s trade policy.
Growth, sentiment and trend
In percent
The economic figures for the fourth quarter of last year were disappointing. The eurozone as a whole recorded zero growth, with performance held back in particular by the region’s heavyweights Germany and France. Besides economic problems, they are suffering from political deadlock and actually saw a slight decline in the last quarter. The start to the new year was also rather uninspiring overall. The industrial sector is still failing to pick up momentum, and although economic performance is stagnant, there was again no progress in tackling inflation in January. This is making the situation increasingly uncomfortable for the European Central Bank (ECB), which recently cut interest rates significantly in an effort to bolster the economy.
Growth, sentiment and trend
In percent
The major emerging markets had a subdued start to the new year. In China, by far the world’s largest emerging economy, business sentiment had already deteriorated significantly in the run-up to US President Donald Trump’s announcement that all imports from China would be subject to 10 percent tariffs. At the same time, domestic demand has remained weak. Even so, the threat of deflation has receded sharply with core inflation recently rising to 0.6 percent. And in India, the second-largest emerging economy, initial economic data has also been quite disappointing, with a significant decline in service sector activity of particular concern. Pessimism among Indian service providers is currently at levels last seen two years ago.
Growth, sentiment and trend
In percent
Global economic data
| Indicators | Switzerland | USA | Eurozone | UK | Japan | India | Brazil | China |
|---|---|---|---|---|---|---|---|---|
| Indicators GDP Y/Y 2024Q3 |
Switzerland 2,0% |
USA 2,7% |
Eurozone 0,9% |
UK 1,0% |
Japan 0,6% |
India 5,4% |
Brazil 4,0% |
China 4,6% |
| Indicators GDP Y/Y 2024Q4 |
Switzerland n. a. |
USA 2,5% |
Eurozone 0,9% |
UK 1,4% |
Japan 1,2% |
India n. a. |
Brazil n. a. |
China 5,4% |
| 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 5,3% |
Brazil 1,7% |
China 3,7% |
| Indicators Inflation |
Switzerland 0,4% |
USA 3,0% |
Eurozone 3,0% |
UK 2,5% |
Japan 3,7% |
India 4,3% |
Brazil 4,6% |
China 0,5% |
| Indicators Policy rates |
Switzerland 0,5% |
USA 4,5% |
Eurozone 2.9% |
UK 4,5% |
Japan 0,5% |
India 6,25% |
Brazil 13,25% |
China 3,10% |
Source: Bloomberg