Switzerland: Slow and steady growth - Wells Fargo

Analysts from Wells Fargo, point out that Q1 GDP growth data from Switzerland showed that the economy continues to growth at a slow and steady rate. According to them continued muted growth will not likely spur inflationary pressures in the foreseeable future.

Key Quotes: 

“Data released this morning revealed that real GDP in Switzerland grew 0.3 percent in Q1 (1.1 percent annualized), undershooting the consensus expectation which called for 0.5 percent growth. Despite the miss, Q1 growth was the strongest since Q2-2016.”

“A breakdown of Swiss output into its underlying demand components shows mixed results in the first quarter. Household consumption was notably weak, growing just 0.1 percent in Q1. However, a slowdown in personal consumption growth could have been expected given its 0.9 percent increase the previous quarter. Government spending increased 0.4 percent to mark its twelfth consecutive quarter of expansion. Business investment in equipment and software increased a strong 1.7 percent on the quarter while construction investment edged up 0.4 percent.”

“Moreover, exports (excluding valuables) jumped 3.9 percent on the quarter, following a 3.5 percent pullback in Q4-2016. Likewise, exports of services grew 3.2 percent (…) As economies in the Eurozone begin to gain momentum, as we expect, Swiss export growth should remain positive.”

“Consumer price inflation in Switzerland emerged from negative territory in January for the first time in over two years. The core CPI followed suit in March, however both price measures remain dangerously close to slipping back into negative territory. The aforementioned appreciation of the franc has put downward pressure on inflation via lower import prices.”