GDP forecast based on semantic business cycle identification

Release 2020-05-14
    Figure 1: Business cycle indicator and Swiss GDP with forecast  


Forecast update. Just before COVID-19 hit the «KOF Surprise Indicator» slips again to -0.04 (2019 Q4: -0.02) logging moderate 0.8 percent growth year-on-year in the first quarter, 2020. The new estimate benefits from the usual upward revision of SECO figures in SECO's March release.
«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 2020(1), fitted values otherwise, *seco releases (left: November 28, 2019, right: March 3, 2020).

Sample: 2000 (2) - 2019 (4), Forecast: 2020 (1), SECO data

Note: Forecast obtained by best nowcasting model.

Nowcast. With Covid-19 striking in the last weeks of the first quarter, survey results already take a hit pushing the KOF Surprise Indicator down to -0.04. Accordingly, 2020q1 Swiss GDP growth estimate recede to 0.8 percent year-on-year indicating that Switzerland enters Corona recession from a rather weak starting point.
    Outlook. All economic concerns other than the virus seem to have paled in recent weeks. Next to the search for an efficient re-openening strategy economists ponder the impact of government aid to the ailing economy. Indeed, Switzerland's extreme debt brake rules need to be handled with utmost care should the government support not deepen and widening the current slump against government's and parliament's best intentions.  
    Switzerland is in a pole position for a head start into recovery thanks to public expenditure financing options other countries just do not have. Most notably, tapping into the vast unused and unnecessary equity reserves of the Swiss National Bank must be seriously considered.  

Special feature: Federal budget in Switzerland Public opinion in Switzerland has it that repeated surpluses in the Federal budget are the results of considerate and modest budgeting in line with the famed Swiss debt brake. The truth is more prosaic. The lion's share of surpluses is owed to systematic business cycle forecasting errors. (in German). Read on»

Previous update
Standard error of regression*
Business cycle data (csv) download
History 2019-11-15 release
  2019-08-14 release
  Complete release history
  First release
Next release 2020-08-13
    *Standard error of regression refers to baseline model published in the first release.  

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