Swiss Economy Estimated to Post 1.5% Quarterly Growth in Second Quarter
Key Takeaways
- •Provisional data indicates Swiss GDP expanded 1.5% quarter-on-quarter in the second quarter, accelerating sharply from 0.4% growth in the first quarter.
- •The industrial sector made the largest contribution to growth, driven particularly by the chemical and pharmaceutical industry, and the services sector also grew overall.
- •Overall Swiss exports rose 8.8% in the second quarter, with exports to the United States up 21.5%, largely reflecting frontloading ahead of a pharmaceutical tariff threat that was dropped in July.
- •The flash estimate may be revised when the detailed GDP report is released in about 60 days, and third-quarter trade data will show whether export flows normalized after the tariff threat passed.
- •The Swiss National Bank cut its policy rate to 0% in June as it weighed subdued inflation against franc pressure facing major exporters such as Novartis and Roche.
Switzerland's economy is estimated to have expanded by 1.5% quarter-on-quarter in the second quarter, a sharp acceleration from the 0.4% growth recorded in the first quarter, according to provisional GDP figures.
The reading is a flash estimate and may be revised once the more detailed report is released in approximately 60 days, which limits the amount of detailed information currently available.
In its accompanying statement, the Swiss statistics office noted:
"The industrial sector made the largest contribution to growth, which was driven in particular by the chemical and pharmaceutical industry. The services sector also grew as a whole."
The figures indicate that much of the quarter's expansion was driven by a surge in chemical and pharmaceutical exports, particularly to the United States. The sector is the largest single category of Swiss goods exports, so swings in its shipments have an outsized influence on headline growth.
Swiss foreign trade rebounded materially in the second quarter, with overall exports rising 8.8%. Exports to the US were up 21.5% amid a further tariff threat to the pharmaceutical sector in April. The increase in exports and trade — and in turn GDP — appears to reflect another round of frontloading as companies sought to get ahead of the threatened measures before the tariff threat was dropped in July. Because frontloading shifts shipments into an earlier quarter rather than adding to demand over time, third-quarter trade data and the revised GDP figures due in about 60 days will show whether export flows normalized once the threat had passed.
The chemical and pharmaceutical industry, home to major companies such as Basel-headquartered Novartis and Roche, is one of Switzerland's largest export sectors — with the United States its biggest single market — and Swiss GDP and trade figures are reported in Swiss francs (CHF). Currency strength is a standing consideration for those exporters, and the Swiss National Bank cut its policy rate to 0% in June as it weighed subdued inflation against franc pressure.
