The Swiss economy persists and signs

The Swiss economy persists and signs
The Swiss economy persists and signs

After another exceptional year in 2021, the Swiss economy should continue on the road to growth in 2022, even if some ruts are already visible.

Out of the ordinary, the expression also applies to 2021. While 2020 will remain an exceptional year due to the pandemic tornado and its health, human and economic consequences, 2021 will be just as remarkable for the scale of the recovery. What is true elsewhere is also true in Switzerland, as should be confirmed by the GDP statistics for the third quarter published tomorrow by the State Secretariat for Economic Affairs (SECO).

Boosted by central bank stimulus measures and government support actions, Swiss growth has picked up significantly in recent months, driven first by the resumption of international trade – and de facto exports -, then supported by the tonic rebound in industrial activity, followed by the more bumpy recovery in household consumption.

If the activity figures flirt with those of early 2020, they once again reflect our country’s ability to adapt to an unstable and complex environment. GDP in the second quarter was up 1.8%. Even if this performance is below the European results, it brought activity in Switzerland to a level closer to what it was before the outbreak of the health crisis than in neighboring countries. A level that was exceeded during the summer as the labor market continued to gradually improve.

Some areas of activity, especially those related to services, are struggling to return to pre-COVID-19 levels.

Despite dynamic growth figures, all is not yet for the best in the best of Swiss worlds. Some areas of activity, especially those related to service activity, are struggling to return to pre-COVID-19 levels. Demand is still weak, while these sectors find it difficult to find the employees necessary for a full recovery in their activity. This is true in the hotel and catering industry, but not only. And, beyond health, it seems, on the job market (the unemployment rate drops regularly), there is a number of short-time workers still significantly higher than it was before. March 2020.

More pungent inflation

The economic rebound in recent months has also translated into persistent supply difficulties. Many activities pay the price, whether it is to have enough paper, construction wood or electronic chips. What affects consumers the most, however, remains the sharp rise in energy prices, an increase instilled by several disparate factors between producers’ desire to contain supply, difficulty in increasing production capacities, and sharply rising global demand. , skyrocketing sea freight costs or difficulty of transhipment in congested ports.

These upward pressures on input prices have translated into a gradual increase in prices, starting with producer prices, then consumer prices. Last September, Swiss “inflation” thus found itself in positive territory (1.2% year-on-year), a level far removed from the deflationary -0.6% of twelve months ago. Even if this increase in consumer prices is scratching the purchasing power of households – wages are increasing more or less at the same rate -, it is still well contained compared to the figures for the euro zone (4.1%) or United States (6.2%).

A franc always expensive

This relative softness of Swiss inflation reflects both the parsimony of companies in transferring the rise in production costs to their selling price and the strength of the franc. After losing some ground at the start of the year against the euro, our dear currency continues to strengthen against the single currency. It continues to act as a safe haven in the face of international uncertainties or new European ups and downs. It also attracts investors eager to invest their liquidity – the yields on Confederation bonds are anecdotal, but higher than those of Germany. The icing on the franc cake, Switzerland displays much lower inflation than that which eats up the purchasing power of European or American households, a situation which “mechanically” increases the attractiveness of the franc.

Third quarter GDP statistics should demonstrate the resilience of our economy.

Sustained growth in 2022, but more normal

If Swiss growth disappointed before the summer, at least compared to the figures for the euro zone or the United States, the GDP statistics for the third quarter should demonstrate the resilience of our economy, the ability of our companies to rebound. and to reorient, at least in part, their supply chains, the international attractiveness of our niche products, etc. Good results would not even be a surprise since, since the financial crisis of 2008, Switzerland has regularly posted growth in its GDP close to that of the United States (around 1.3% per quarter since 2008), a much higher increase. higher than that of the euro zone (0.4% per quarter over the same period).

Beyond the unfortunate, but now recurring cold snaps linked to the pandemic, the growth of our country should progress in 2022 at a rate of the same ilk as that of this year, i.e. around 3%. Behind these excellent results in absolute terms, however, some cracks are emerging. These good numbers will reflect important base effects, such as the gloom in the first quarter of this year. They may also suffer from less exceptional government spending, a little more timid investments and a slightly less lively export dynamic. It should come as no surprise to witness, over the next few months, one or two quarters of apathetic growth.

Growth in 2022 will continue to benefit from a very low interest rate environment, with an SNB sticking to its positions, while long rates on Confederation bonds will struggle to exceed frankly zero per cent. It will also benefit from the financial health of households, even if the increase in wages could disappoint more than one. With a high savings rate and falling unemployment, there is room for consumption to increase further, consumption more oriented towards services as vaccination progresses and as soon as social distancing measures are taken. fade away.

2022 should thus prove to be a new conjunctural bon cru, but a cru more complex than that of this year, a cru whose structure will once again depend on the behavior of the franc.

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