Swiss GDP grows underwhelmingly as manufacturing remains weak

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In the period from July to September, Switzerland’s GDP grew 0.4% quarter-to-quarter, down from the 0.6% total recorded in the period from April to June.

Adjusted for sporting events, this total came in at 0.2% in the third quarter, down from 0.4% in the second quarter.

The greatest boost to growth came from trade, which was up 1.4%, expanding considerably after four weak quarters. 

Private consumption showed above-average growth at 0.5%, while government consumption and construction investment also increased.

Health and social services, meanwhile, recorded growth of 0.5%, while financial services recorded a decline of 2.3%.

Investments in equipment such as machinery, vehicles and IT dropped 1.3%, and imports slid 0.4%.

The industrial sector recorded a particularly bad third quarter.

Manufacturing fell 1.1%, while the chemical and pharmaceutical industry grew by a mere 0.2% after strong growth in the previous quarter.

“The Swiss economy is very open and strongly influenced by its environment, particularly by its neighbouring countries, which have been slowing down,” said Philippe Bacchetta, professor of macroeconomics at the University of Lausanne.

He told Euronews that domestic consumption nonetheless remains robust.

“In my view, the short-term outlook is stable, with steady consumption, subdued exports, and weak investment. However, in the medium term, significant uncertainty in the global environment poses risks for exports, while a low level of investment is a cause for concern.”

Sergio Rossi, professor of macroeconomics at the University of Fribourg, also told Euronews that a drop in exports has hit the Swiss economy, linked to geopolitical tensions and the recession in Germany.

“A number of export-oriented firms in Switzerland suffer from the crisis affecting European car producers, notably in Germany, as several Swiss firms produce many components for the automotive industry in Europe,” he explained.

Rossi added that the Federal and Cantonal Governments are also planning spending cuts to reduce public deficits.

“This further reduces firms’ propensity to invest and to hire people willing and able to work across the Swiss economy.”