Swiss economy grew below average in 2023
Published: Thursday, Feb 29th 2024, 14:40
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The Swiss economy felt the effects of the international economic slowdown in the fourth quarter and grew only slightly. Growth also remained well below average in 2023 as a whole.
Real gross domestic product (GDP) in Switzerland increased by 0.3% in the period from October to December 2023 compared to the previous quarter. This continued the below-average growth of the previous quarter, the State Secretariat for Economic Affairs (Seco) announced on Thursday. The figure was in line with economists' estimates, albeit at the upper end.
According to Seco, the individual sectors and usage components developed differently. For example, value added in the manufacturing sector, i.e. traditional industry, fell slightly after a positive previous quarter, while the services sector benefited from the continued recovery in international tourism.
Sharp slowdown in 2023
Now that the figures for the fourth quarter are known, Seco has also published an initial estimate of GDP growth for the year as a whole. This also shows that growth was clearly below the previous year and therefore also below average. According to the estimate, GDP adjusted for seasonal, calendar and sporting event effects grew by 1.3% in 2023, just over half as fast as in 2022 (2.5%).
In the adjusted calculation, license income for major sporting events, which often take place in Switzerland, is excluded. Without this adjustment, the decline in 2023 compared to 2022 would have been even more pronounced (0.7% after 2.6%).
However, the figures should still be treated with caution. As a large number of figures and statistics are included in the GDP calculation, there may be major revisions in one direction or another at a later date.
However, the clear slowdown last year is unlikely to change. According to Seco, this is related to the normalization in the wake of the coronavirus crisis. In addition, the challenging international environment has weighed on economic development. In Germany in particular, Switzerland's most important trading partner, the economy has come to a virtual standstill.
"No island"
In view of this, economists are not overly concerned by the local figures. GDP growth in the fourth quarter was even slightly better than expected, according to Thomas Gitzel from VP Bank, but he also says: "Switzerland is not an island of growth." With its high proportion of exports, the Swiss economy cannot decouple itself from the weak development in the eurozone.
For Karsten Junius of Safra Sarasin, the warning signs should not be overlooked either: Equipment and construction investments have once again been on the decline, he says. He also concludes that the Swiss National Bank's (SNB) monetary policy is probably too restrictive in the medium term.
According to Alessandro Bee from UBS, the two-tiered economy that was observed last year - weak industry but solid consumption - is also likely to characterize the current year 2024. Most economists expect GDP growth in 2024 to be as high as last year.
GDP per capita declining
So even if growth has slowed significantly in 2023, Switzerland seems to be pretty far away from recession. However, the 2023 balance sheet looks much worse for Switzerland if you take a closer look at the GDP figures per capita of the Swiss population. This reflects both the dynamics of GDP and the development of the population, writes Seco.
And according to initial estimates by federal economists, there will be a slight decline of 0.1% in 2023 (adjusted for sporting events). In addition to the economic slowdown last year, population growth is likely to have been higher than in previous years, according to Seco. Among other things, it points to increased net immigration due to sustained demand on the labor market.
©Keystone/SDA
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