GDP forecast based on semantic business cycle identification

Release 2021-02-24
    Figure 1: Business cycle indicator and Swiss GDP with forecast  


Forecast update. Defying gloomy predictions as well the second wave of Corona infections and deaths the Swiss economy stayed rather stable in the fourth quarter of 2020, the «KOF Surprise Indicator» suggests. At -0.046 it hardly moved signalling a record 2.5 percent drop in GDP in 2020. This decline compares to -2.1 percent for 2009, the worst result so far on recent record.
«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(4), fitted values otherwise, *seco releases (left: Sep 27, 2020, right: Dec 1, 2020).

Sample: 2000 (2) - 2020 (3), Forecast: 2020 (4), SECO data

Note: Forecast obtained by best nowcasting model.

Nowcast. In the final quarter of the past year the Swiss economy suffered again from the pandemic but without actually testing new troughs, the KOF Surprise Indicator tells.
The new value of -0.047 compares very well to its previous -0.48 (revised up from -0.049) in Q3, 2020 putting the annual growth rate of Swiss real GDP at -2.5 percent which is considerably better than predicted four months ago. The quarterly y-o-y growth amounted to -0.45 percent (-0.32 in the previous quarter.
    Outlook. The rather moderate restrictions as well as the government support for ailing businesses in response to the second wave seem to have payed off quite handsomly in terms of value added. Unfortunately, infections and deaths rates meanwhile hit new records.  
    Despite the rather slow inocculation of the Swiss population chances are good that 2021 will see an almost complete recovery from the pandemic-induced recession if fiscal and monetary policy stay clear of austerity measures.  
    Monetary policy in particular, must eventually rise to the challenges of a sluggish economy and a ballooning central balance sheet and gigantic profits. The Swiss National Bank should start transferring part of its net revenues directly its to the Swiss population to the tune of ten to fifteen billion Swiss Francs annually as earlier suggested.  

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Previous update
Standard error of regression*
Business cycle data download
History 2020-08-20 release
  2020-05-14 release
  2020-02-19 release
  Complete release history
  First release
Next release 2021-05-13
    *Standard error of regression refers to baseline model published in the first release.  

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