Driven by the jump in consumer spending and despite the weakening of value creation in the manufacturing industry, the Gross Domestic Product (GDP) grew 0.3% compared to the 0.5% growth registered between January and the end of March.
On an annual basis, Switzerland’s GDP grew by 2.8% in the quarter under review, after having increased by 4.7% in the first three months of the year, a figure revised upwards from the 4.4% announced at the end of May. The return to normality from a health point of view at the beginning of April signaled the end of most of the measures aimed at combating the coronavirus, explained the Secretary of State for the Economy (SECO) on Monday.
The SECO numbers are in line with the expectations of economists consulted by the AWP agency. Analysts had forecast GDP growth of between 0.2% and 0.5% from the previous quarter.
A sector heavily affected by the latter, services benefited above all from the recovery, with hotels and restaurants registering the highest growth (+12.4%). International tourism continued its recovery until the end of the 2nd quarter, benefiting in particular from the return of European and American customers. The truth is that the level of value creation in accommodation and catering registered, however, a drop of 10% compared to the pre-crisis period.
Distressed financial services
In the arts, entertainment and recreational activities sector (+1.4%), added value also increased after the removal of health measures. But there, too, production still fell by 17% compared to the situation before the start of the pandemic.
Reflecting the gradual return to mobility of the population, the transport and communications sector also registered a positive evolution (+4.4%), settling at around 3% above the pre-crisis value.
Only two branches of services had a fall in production between April and the end of June: financial services (-1.5%) and commerce (-2.1%), the latter mainly due to the evolution of the retail and wholesale food trade. The almost generalized growth of the services sector was accompanied by an increase in services exports (+5.0%).
The lifting of measures linked to the coronavirus boosted private consumption (+1.4%), after a timid evolution in the winter semester. Households spent more on hotels and restaurants and other services. Negative in the previous quarter, investment in capital goods (+2.6%) increased strongly.
strong domestic demand
In short, the strong growth in domestic demand was accompanied by solid growth in imports (+2.1%). However, investment in construction fell again (-0.2%), reflecting the negative evolution of construction (-1.7%). This is the only component of domestic demand to contract in the 2nd quarter.
In the manufacturing industry, added value presented a slight contraction (-0.5%), after registering above-average growth for seven quarters. This evolution is mainly due to the chemical-pharmaceutical industry, where exports dropped.
On the other hand, other industrial activities, generally more sensitive to the economic situation, recorded a slight increase. Exports of goods5 globally declined sharply (-11.5%), due, in particular, to the significant drop in transit trade.
VP Bank notes that the situation could very well have been worse given the recent news on the macroeconomic front. But unlike the rest of the world, the subject of inflation is less burning in Switzerland, with inflation reaching 3.5% in August, a low level in international comparison.
But a eurozone recession would not be without consequences for Switzerland. In this sense, the 11.5% drop in exports in the 2nd quarter is a warning sign, as the world economy prepares to face difficult winter months.
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