In the second quarter of 2024, Switzerland’s GDP adjusted for sports events grew by 0.5%, following 0.3% in the previous quarter.1,2 This result was slightly above average, driven by strong expansion in the chemicals and pharmaceuticals industry. Growth in other sectors was mixed, reflecting weak domestic demand. Value added in manufacturing (+2.6%) grew at an above-average pace in the second quarter. The chemicals and pharmaceuticals industry (+8.4%) recorded strong quarterly growth on the back of dynamic exports. However, value added in other industrial sectors declined, reflecting weaker industrial performance.
The weak industrial performance seen elsewhere in Europe. Exports of goods3 (+6.9%) showed strong growth overall, while exports of services4 (+1.5%) also increased slightly. Overall, foreign trade proved to be an important pillar of GDP growth in the second quarter.
In contrast, domestic final demand (-0.0%) and thus imports (-0.0%) of goods and services remained stagnant. Investment in equipment (-1.4%) fell slightly. Vehicles in particular saw lower investment, but so did machinery and R&D. This was offset by moderate increases in construction investment (+0.5%) and consumer spending. As with government consumption (+0.2%), growth in private consumption (+0.3%) was also below average.
It was supported mainly by spending in housing and healthcare but also in other areas such as restaurants and hotels. The stagnation of domestic demand was reflected in weak growth in value added in services, with large differences across the sector. In the accommodation and food services sector (+2.7%), value added increased thanks to a rise in the number of foreign
domestic guests. Unadjusted GDP growth
Health and social care services (+1.1%), business-related services (+0.6%) and public services
1 Unchanged since the “Preliminary GDP Data” published approximately 45 days after the end of the quarter (+0.5%).
2 To facilitate periodic interpretation, this press release presents quarterly growth rates in real terms,
seasonally adjusted and (where applicable) adjusted for sporting events. The sporting events adjustment relates to GDP, the “Arts, entertainment and recreation” sector, exports and imports of services and GDP growth unadjusted for sporting events: +0.7% in Q2 2024 and +0.5% in Q1 2024.
3 Goods excluding valuables.
4 Unadjusted for sporting events: +1.6%.
5 Excluding valuables. Impacted by sporting events: GDP, exports and imports of services.
Seasonally adjusted including calendar adjustment. Manufacturing: Noga 10-33; Construction 41-43; Trade: Wholesale and retail trade; Repair of motor vehicles, Noga 45-47;
Social: Human health and social work activities, Noga 86-88; Arts, entertainment and recreation: Arts, entertainment and recreation, Noga 90-93. Other: Agriculture, forestry and fishing, Noga 01-03; Mining and quarrying, Noga 05-09; Energy and water supply, waste management and treatment activities, Noga 35-39; Transport and storage, Noga 49-53; Information and communication, 58-
63; Education, Noga 85; Other service activities, 94-96; Activities of households as employers, Production activities of households for own use, Noga 97-98; Taxes and subsidies on products.
Impact on the European and global economy:
Reducing the economic gap: The growth of the Swiss economy is above the European average, which helps to reduce the economic gap between Switzerland and the rest of Europe. This growth strengthens Switzerland’s position as a strong economic hub in Europe.
Impact on international trade: Swiss economic growth enhances the country’s ability to expand international trade. Increased Swiss exports contribute to stronger trade relations with other countries, increasing economic influence globally.
European Central Bank Policymakers
European Central Bank policymakers are increasingly divided over the outlook for growth, sources close to the debate said, a disagreement that could shape the interest rate cut debate for months, with some fearing recession while others focus on persistent inflation pressures. The ECB cut rates in June and is almost certain to ease them again in September in a sign of slowing price growth.
However, conversations with about a dozen sources suggest that future policy decisions are likely to be more complex as the eurozone economy enters a more serious state. At the heart of the debate is how weak economic growth and a possible recession will affect inflation — the bank’s ultimate focus — as it tries to bring inflation down to 2% by the end of 2025.
While most of the discussions are held in private, conversations with people familiar with them reveal divergent views. An ECB spokesman declined to comment. Political doves, who remain in the minority, argue that the economy is weaker than expected, that recession risks are rising, and that companies that had been hoarding workers are starting to cut jobs, making the labor market even weaker.
Once employment falls, disposable income falls, which quickly eats away at consumption and leaves deflation reinforcing itself. “That would dampen price pressures faster than we expect now, so I think the risk of a return to below-target inflation is real,” said one source, who asked not to be named. They say this suggests the central bank is behind the curve in cutting interest rates and easing economic pressures, bolstering the case for faster rate cuts. Inflation, which fell to 2.2 percent in August, is now expected to rise again by the end of the year and return to just 2 percent in late 2025.
