Economy continues dynamic recovery

Bern, 20.03.2018 - Economic forecasts by the Federal Government’s Expert Group – spring 2018*. The Federal Government’s Expert Group expects the economy to continue its dynamic recovery and anticipates strong GDP growth of 2.4% in 2018. The buoyant international economy is supporting foreign trade, while a favourable investment climate is stimulating domestic demand. Amid a gradual slowdown in the global economy, GDP growth is expected to moderate to a solid 2.0% in 2019. The promising upturn is to be accompanied by a further noticeable brightening on the labour market and a moderate rise in inflation.

Switzerland’s economy has not looked this healthy since the minimum euro exchange rate was discontinued in early 2015. The upturn gathered increasing momentum and became more broad-based in the second half of 2017. In addition to manufacturing, service sectors that primarily rely on domestic demand are increasingly providing fresh impetus; solid growth can also be seen overall on the expenditure side of GDP. The labour market is showing clear signs of improvement as well. The leading indicators in Switzerland and at international level suggest this marked expansion will continue in the short term. The favourable global economic climate continues to provide the economy with strong backing, with the outlook seeming a little brighter than the previous forecast suggested.

In light of this, the Federal Government’s Expert Group expects the Swiss economy to continue flourishing over the coming quarters, anticipating strong GDP growth of 2.4% in 2018 (December 2017 forecast: 2.3%). Momentum in the major economic zones and, by extension, in Switzerland is likely to slow gradually in the second half of the forecast period, with the Expert Group expecting GDP growth to remain solid at 2.0% (December 2017 forecast: 1.9%).

The healthy global economy is boosting international demand for Swiss products and therefore driving foreign trade. Exports are likely to see robust and broad-based growth over the coming quarters, particularly if there is no upward pressure on the Swiss franc. Especially those exports that are sensitive to the global business cycle and exchange rates, such as machines, metals and tourism, look set to enjoy dynamic growth. The chemical and pharmaceutical industries are also expected to gather pace. Overall, the Expert Group predicts that foreign trade will provide a significant boost to growth in 2018 especially but also in 2019.

Growth in the global economy is also resulting in greater domestic demand further down the line. In keeping with the international climate, the upward trend in investment in equipment is set to continue during the forecast period, with industrial companies’ order books looking wellfilled, capacity utilisation at its highest for years and financing conditions favourable. The latest surveys also suggest that companies are engaging in a healthy level of investment. By contrast, there is likely to be only a moderate rise in consumption over the coming quarters. While the situation on the labour market is improving again, there is unlikely to be much of an increase in real wages in the short term. The Expert Group believes growth in consumption will eventually accelerate a little more over the course of the forecast period. Meanwhile, it expects consolidation of investment in construction to continue at a high level. The rising number of empty homes and subdued order books point to a subdued development in construction.

The effects of the pleasing economic climate can also be seen in the labour market. Unemployment has now been in gradual decline since mid-2016, while employment also stepped up in the second half of 2017. As various leading indicators on the labour market suggest, dynamic economic growth will spark further recovery over the coming quarters. The Expert Group is therefore anticipating a marked increase in employment (1.3% in 2018 and 1.0% in 2019) and a further drop in unemployment (2.9% in 2018 and 2.8% in 2019).

Underpinned by further rising oil and import prices, inflation is set to climb to a modest 0.6% on average in 2018. In view of the favourable economic climate, price pressure in Switzerland also looks set to pick up again over the course of the forecast period, with the Expert Group therefore predicting that inflation will increase again slightly to 0.7% on average for 2019.

Economic risks
In terms of the global economic outlook, short-term positive and negative risks are balanced. The global upturn could last longer than expected and the Swiss franc could depreciate further in the context of continued good international economic conditions. This in turn would give the Swiss economy a further boost.

However, the protectionist measures recently announced in the US pose negative risks for the global economy. Although the tariffs recently imposed on metal imports are unlikely to affect the Swiss economy very much, any escalation to a trade war between the major economic zones would have a considerable dampening effect in the medium-term. While the situation on the financial markets has calmed down again over the past few weeks, the risk of turbulence remains, triggered for example by the unexpectedly rapid normalisation in monetary policy in the US. This could create further upward pressure on the Swiss franc.

What is more, a certain political uncertainty remains on the international stage. The results of the recent Italian general election have made it difficult to form a government, the terms of the Brexit negotiations remain unclear and there are uncertainties in Switzerland’s relationship with the EU too. In Switzerland itself, there is also a risk that the construction sector will undergo a sharper correction than is forecast.

*More detailed information on the Expert Group’s forecast can be found in the quarterly publication “Konjunkturtendenzen” (“Economic Trends”), which is available online (in German and French only, see and in printed form as a supplement to the political economics magazine “Die Volkswirtschaft“ (

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Last modification 12.02.2020

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