The Swiss economy exceeded expectations with a stronger-than-expected growth rate in the first quarter of 2023, driven by robust domestic demand and increasing exports, according to the State Secretariat for Economic Affairs (SECO). Adjusted for sporting events, economic output expanded by 0.5% compared to the previous quarter, surpassing the 0.1% growth rate forecasted in a Reuters poll and indicating an improvement from the stagnant performance at the end of 2022.
On a year-on-year basis, the Swiss economy grew by 0.9% in the first quarter, outperforming economists’ projections of 0.6% growth. While the manufacturing sector experienced a slight uptick with 0.3% quarter-on-quarter growth, the finance sector faced challenges due to the turbulence surrounding the collapse of Credit Suisse.
Consumer spending demonstrated a solid increase of 0.6% during the quarter, while exports recorded a notable growth of 4%. The continued recovery in travel played a significant role in buoying the transport and communication sector (+0.7%) and the accommodation and food services sector (+1.0%), both of which experienced above-average value added growth, as stated by SECO.
While the services sector performed well, consumer spending on goods experienced a more moderate pace of growth, with a decline of 0.4% in retail value added. The positive performance of the Swiss economy stands in contrast to neighbouring Germany, which recently reported entering a recession in early 2023 after a 0.3% contraction in GDP during the first quarter, primarily due to a decrease in household spending caused by higher inflation weighing on consumption.
The Swiss economy’s resilience and strong growth in the first quarter indicate the positive impact of domestic demand and expanding exports. Although challenges persist in certain sectors, such as finance, the overall performance positions Switzerland favourably compared to its European counterparts, with promising prospects for continued economic recovery.
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