GDP forecast based on semantic business cycle identification

Release 2019-08-14
    Figure 1: Business cycle indicator and Swiss GDP with forecast  


Forecast update. Weak growth of Swiss value added continues despite a slight uptick of the «KOF Surprise Indicator» to -0.03 (2019 Q1: -0.05). This latest reading indicates that annual growth remains below the one-percen mark year-on-year expansion estimated to amount to 0.84 percent in the second quarter of 2019.
«home   Table: Swiss real gross domestic product with forecast  

Year-to-year growth (%) of Swiss real gross domestic product (GDP)
fitted / forecast
standard error
seco estimates*

Sources: Own calculations, forecast for 2019(2), fitted values otherwise, *seco releases (left: February 28, 2018, right: May 28, 2019).

Sample: 2000 (2) - 2019 (1), Forecast: 2019 (2), SECO data

Note: Forecast obtained by best nowcasting model.

Nowcast. Escalating trade conflicts, internal EU struggles and the consequential appreciation of the Swiss currency leave their marks on the Swiss business cycle. Swiss real value added, therefore, expanded by a meagre 0.8 percent year-on-year according the the latest estimate based on the KOF Surprise Indicator.
    This new estimate also builds on SECO‘s latest data releases for 2019 which will in all likeilihood be revised downwards following a considerable upward revision of 2018 growth (see special analysis). Therefore, actual year-on-year growth could well be even weaker than estimated.  
    Outlook. Weak growth is accompanied by rather bleak prospects as several factors cloud the outlook for the Swiss economy including the US-triggered international trade conflicts, the internal EU disputes over migration, Italy‘s constitutional crisis, weak GDP growth in Germany and the rising possibility of a «hard Brexit».  

  These global factors contribute to heightened uncertainty leading to an increase in demand for „safe heaven“ assets like the Swis Franc. In response, the Swiss National Bank (SNB) has resumed its purchases of foreign reserves in an attempt to slow down the appreciation of the national currency.  
    In the medium run, Switzerland‘s hesitation to commit to a framework agreement with the EU may eventually hamper economic dynamics and relieve the SNB from exchange rate concerns.  

Special feature: The Swiss debt brake works - in a perfect world. Unfortunately, poor business cycle forecasts and sizeable revenue and expenditure forecast errors make the perfect mechanism look rather dysfuntional in reality. Quick fixes are not easy to come by but a few simple measures would have the potential to overcome some key weaknesses (in German). Read on»

Previous update
Standard error of regression*
Business cycle data (csv) download
  2018-11-14 release
  2018-08-15 release
  Complete release history
  First release
Next release 2019-11-13
    *Standard error of regression refers to baseline model published in the first release.  

Quarterly nowcast update. Order your free personal quarterly email alert with the latest GDP estimate based on the «KOF surprise indicator». Subscribe here»