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The Swiss economy has stagnated recently – and is also likely to grow less than previously expected by the end of the year.
Only 0.7 instead of 0.9 percent: The economists at UBS are adjusting their growth forecast for the Swiss economy for 2023 downwards.
Despite the economic slowdown, Switzerland is not threatened by a recession such as that in neighboring Germany or Italy. The State Secretariat for Economic Affairs (Seco) still expects growth of a good one percent by the end of the year. The Seco figures published today – GDP stagnated in the second quarter – are therefore neither a cause for concern nor surprising.
The global economic engine sputters
The stagnation is mainly due to the weakening global economy. It was the aim of the western national banks to cool down the economic engine with rising interest rates so that prices no longer rise and inflation is slowed down.
This monetary policy measure now appears to be having an effect – the willingness to invest is being dampened by less attractive financing conditions, which is slowing down economic growth.
Although wanted from a monetary policy point of view, the Swiss export sector in particular is now suffering from this. Compared to the previous year, exports of goods fell by 1.2 percent. A key factor here is the lack of an economic upswing in China after the corona measures were lifted. This was expected to be much larger and is now reflected in fewer full order books and falling export figures.
Caption: The European economy has lost momentum – Switzerland is also feeling the effects. Image of the Basel container terminal near the Swiss Rhine ports, taken on April 13, 2022. IMAGO / dieBildmanufaktur
In addition to a weakening Chinese economy, the war of aggression against Ukraine is contributing to sluggish economic development. Across Europe, companies are investing less than in normal times.
The director of the business umbrella organization Economiesuisse, Monika Rühl, is also concerned about the economic situation in Germany, one of the most important sales markets for Swiss companies: “The Swiss economy is dependent on Germany. The German economy is already in a recession and there are currently no signs that it will find its way out of it. It gives me a bit of a stomach ache.”
Wage increases to stabilize the economy
While the industrial sector is showing declining figures due to the difficult environment, private consumption is still increasing. The gastronomy and hotel industry in particular will benefit from this.
To ensure that people in the country can continue to afford good food and vacations, the Unia trade union is demanding substantial wage increases to compensate for inflation. Vania Alleva, President of Unia, warns: «Wages are crucial. When wages fall and pensions are eaten up by health insurance premiums and inflation, then it shouldn’t come as a surprise. Purchasing power is an important tool for stabilizing the economy.”