Upswing unhindered despite risks

Bern, 19.06.2018 - Economic forecasts by the Federal Government’s Expert Group – summer 2018* - The Expert Group is keeping to its previous assessment and anticipates robust GDP growth of 2.4% in 2018. While the booming global economy and favourable trend in exchange rates are boosting demand for Swiss products, growth is also gaining increasing momentum from the domestic economy. The Expert Group expects support from the international economy to gradually abate in 2019, while GDP growth in Switzerland looks set to remain at a solid 2.0% in the coming year.

The Swiss economy is currently experiencing an increasingly broad-based upswing. Industrial companies are continuing to look to the future with confidence and are anticipating robust growth, including in international business. More and more positive noises have also been coming from the domestic economy since the beginning of the year. With value added once again growing considerably in domestic-oriented service sectors and the labour market continuing on the road to recovery, the mood is very good overall. The Expert Group expects the upswing to continue at a similarly rapid rate in the near future. As before, it predicts robust GDP growth of 2.4% in 2018.

The export sector will remain a key pillar of growth in the forecast period. Following a slight lull at the start of the year, the global economy looks set to gather pace again. In particular, the outlook for the US is a little more positive than was envisaged in the last forecast, while the remaining key economic areas are also looking in very good shape. This has pushed up international demand for Swiss products, with a weaker exchange rate for the Swiss franc compared with the past two years also driving growth in exports. Exports which are sensitive to economic cycles and exchange rates, including machinery and metals or tourism services, are likely to see strong growth as a result.

Domestic economic forces will also underpin growth in the coming quarters. While increasing vacancy rates continue to suggest that construction is consolidating at a high level, companies are expected to invest actively in equipment, with production capacity utilisation looking high, order books well filled and financing conditions favourable. Companies are also likely to increase their staffing levels. The Expert Group expects the labour market to recover somewhat faster than was envisaged in the previous forecast, with employment growing appreciably once again (+1.5% in 2018) and the unemployment rate dropping further (to an annual average of 2.6% in 2018) in the coming quarters.** While the upturn in the labour market will also bolster private consumption, real wages are only likely to grow modestly in the near future due to pressure from rising inflation, which is due to come in at an annual average of 1.0% for 2018 in light of the sharp rise in oil and import prices.

For the second half of the 2018/2019 forecast period, the Expert Group predicts that the global economy will gradually resume a normal course after a period of intensive growth. This will mean less momentum from the international economy and will cause economic growth in Switzerland to flatten out, albeit at a high level. The Group also forecasts robust GDP growth of 2.0% for 2019, likely accompanied by a further rise in employment (+1.0%) and another fall in the unemployment rate to an annual average of 2.5%. With the effects of the rise in oil prices petering out and economic growth gradually slowing down, inflation is set to stand at a modest annual average of 0.8% in 2019.

Economic risks
Certain global economic risks have increased since the last forecast. The trade dispute between the US and key trade partners has escalated to new heights after the implementation of tariffs on steel and aluminium imports i.a. from the EU. If the situation were to deteriorate further and trigger a trade war between the major economic areas, this would significantly curb global trade, Swiss exports and, ultimately, economic growth in the medium term.

Political uncertainty in Italy has also deepened. While the newly elected government recently reaffirmed that it does not intend to leave the monetary union, its programme, which proposes in particular expansionary fiscal policy measures implying a deterioration in the country’s budget, is creating major uncertainty. If the situation comes to a head, this could send ripples through the financial markets. It could create considerable upward pressure on the Swiss franc, bringing with it considerable repercussions for the Swiss real economy.

Having seen no change since the previous forecast, there is still a risk of a greater adjustment in the construction sector in Switzerland than is assumed in the forecast. By contrast, the Swiss economy could perform better than forecast as the situation on the labour market improves and investment reaches high levels.

* More detailed information on risks and the Expert Group’s forecasts can be found in the quarterly publication “Konjunkturtendenzen” (“Economic Trends”), which is available online ( and in printed form as a supplement to the political economics magazine “Die Volkswirtschaft” (
** A new recording system was introduced at the regional employment centres (REC) in March 2018. The changeover resulted in a sharper decline in the unemployment rate than can be explained in economic terms (see SECO media release dated 7 June 2018 at The forecast is based on the new lower unemployment rate and is therefore significantly below the figure forecast in March (now: 2.6% for 2018 and 2.5% for 2019, previously: 2.9% for 2018 and 2.8% for 2019).

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State Secretariat for Economic Affairs