by Q1 growth was very encouraging, with investment in equipment and exports as well as sports driving the economy.According to the State Secretariat for Economic Affairs (SECO) quarterly estimates, Swiss real GDP grew by 0.6% q-o-q in Q1 (2.3% q-o-q annualised, 2.2% y-o-y), closely in line with the previous quarter and above consensus expectations (0.5% q-o-q).Several aspects of the report are worth mentioning. First, growth was underpinned by domestic demand, in particular by investment in equipment. Second, the entertainment industry recorded strong growth thanks to major international sporting events. Excluding sports events, Swiss grew by 0.4% q-o-q in Q1.The Winter Olympics in South Korea early this year had an impact on Q1 GDP, as mentioned by SECO in its press release, where it states
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Q1 growth was very encouraging, with investment in equipment and exports as well as sports driving the economy.
According to the State Secretariat for Economic Affairs (SECO) quarterly estimates, Swiss real GDP grew by 0.6% q-o-q in Q1 (2.3% q-o-q annualised, 2.2% y-o-y), closely in line with the previous quarter and above consensus expectations (0.5% q-o-q).
Several aspects of the report are worth mentioning. First, growth was underpinned by domestic demand, in particular by investment in equipment. Second, the entertainment industry recorded strong growth thanks to major international sporting events. Excluding sports events, Swiss grew by 0.4% q-o-q in Q1.
The Winter Olympics in South Korea early this year had an impact on Q1 GDP, as mentioned by SECO in its press release, where it states “There was also a surge in the entertainment industry (+7.3%), largely the result of various major international sporting events being held this year”. These effects fall outside cyclical economic factors and are mainly due to accounting changes.
Looking ahead, the manufacturing PMI points to continued albeit somewhat slower expansion in Q2 2018.
Overall, following the Q1 release, we see no reason to change our Swiss GDP growth forecast of 2.0% in 2018. The balance of risks has shifted from upside to broadly balanced, with the main downside risk stems from the recent strengthening of the Swiss franc due to political instability in the euro area.