Industry Faces Decline
Switzerland’s economic landscape experienced contrasting fortunes in the second quarter of 2023. After a strong start to the year with a 0.9% growth rate, the country’s Gross Domestic Product (GDP) stagnated, recording a mere 0.0% growth. This shift was marked by a significant decline in the manufacturing sector, offset by continued growth in the service industry.
Manufacturing Takes a Hit
Manufacturing, which had shown promise earlier in the year, faced a notable setback, with a decline in value added of 2.9% during the second quarter. A prominent factor contributing to this downturn was the sharp drop in the chemical and pharmaceutical industry, which had maintained a steady trajectory from the high-growth period of 2015 to 2022. Additionally, the challenging global economic landscape placed pressure on cyclical sectors like mechanical engineering and metal construction, further dampening industrial performance. This broader decline in industrial activity manifested in a 1.2% decrease in goods exports across multiple countries and categories.
Construction Sector Struggles
The construction sector also encountered difficulties in the second quarter, experiencing a slight decrease in value-added, down 0.7%. This decline was attributed to shrinking revenues across all segments of the construction industry. Moreover, construction investment decreased by 0.8%, mirroring the broader industry’s challenges. The slump extended to equipment investments as well, with a notable 3.7% drop, particularly in the fields of information technology, research and development, and vehicles.
Mixed Picture for Consumption
Conversely, private and government consumption provided some relief. Private consumption rose by 0.4%, driven by increased spending on housing and services, notably healthcare, food, and accommodation. Furthermore, the accommodation and food services sector witnessed robust growth, with value-added surging by 5.2%, boosted by an influx of international visitors. Government consumption also saw a modest uptick of 0.1%.
Service Sector Resilience
The service sector demonstrated resilience in the second quarter. Health and social care services, business-related services, and the entertainment sector each posted growth of 0.8% and 0.7%, respectively. Despite some fluctuations, value-added stabilized in the financial services sector, driven by increased financial services exports. However, retail trade registered a slight decline of 0.4%, while trade, supported by wholesale trade and car sales, managed to achieve an above-average result with a growth rate of 2.1%.
Positive Impact of Foreign Trade
Foreign trade made a positive overall contribution to GDP growth in the second quarter. Although goods exports declined, this was offset by a 2.6% increase in exports of services and a 3.7% reduction in imports of goods and services. These dynamics played a pivotal role in shaping Switzerland’s economic performance during this period.
Data Revisions and Surveys
In the summer of 2023, the Federal Statistical Office published its first results on the Annual National Accounts for the previous year and the revised results for the two years prior to that. SECO has integrated the updated data into the Quarterly National Accounts and, where necessary, modified the calculation method.
Furthermore, the Swiss National Bank introduced a new current account survey as of the first quarter of 2023. The data currently available for the second quarter is likely to be revised to a greater extent than usual at a later date. Data items from the current account are used at various points in calculating the Swiss National Accounts. As a result, there may be a need for greater revisions than usual over the coming quarters.
As Switzerland reflects on its economic performance in the second quarter of 2023, these additional factors underscore the complexity of economic data analysis and the need for periodic revisions to provide a clearer picture of the nation’s economic health.