Economy: Shift in consumption, rather than abstention from consumption

The current growth figures are surprisingly robust. In contrast to the first lockdown, consumers are not putting aside any money not spent due to restrictions, but are spending it in areas where they still can. This is benefiting economic development.

  • Last March, few people would have predicted that 2020 would be a successful financial year for Swiss retail. However, revenues have constantly exceeded the previous year’s level since May 2020, more than offsetting the slump during the first lockdown across all sectors. Business over the festive period was also brisk – revenues in December were up by almost 5 percent on 2019 figures. As industry is also on the path to recovery and is barely affected by the new restrictions, the economic downturn in 2020 is less drastic than originally feared, at around –3 percent.

    The services sector is currently being hit by the new restrictions. In light of last year’s figures, however, there is a good chance of strong catch-up effects this year, once the restrictive measures have been lifted.

    Growth, sentiment and trend

    In percent

    The graphic shows the actual annual growth in Swiss gross domestic product (GDP) since 1995, its long-term trend and a leading economic climate indicator. The leading indicator points to economic growth of around zero percent in the near future. However, the indicator does not take account of the full extent of the crisis and is currently too optimistic.
    Source: Bloomberg
  • From an economic perspective, the USA fared much better than the eurozone in 2020 (–3.5 percent vs –7.2 percent). No new lockdown was imposed towards the end of the year, allowing the economic recovery to continue. The situation on the labour market is less encouraging. Around 10 million people remain unemployed – particularly in the low-wage sector. There is currently no rapid improvement in sight on the labour market.

    However, the economic recovery looks set to continue for the time being. President Biden is planning another large-scale stimulus package worth 1.9 billion US dollars, including direct payments of up to 1,400 US dollars per person. The package would provide the third direct payment since the start of the crisis and may lend fresh impetus to consumption, despite the challenging situation on the labour market.

    Growth, sentiment and trend

    In percent

    The graphic shows the growth in real US GDP, its long-term trend and a leading economic climate indicator since the mid-1990s. The leading indicator points to economic growth of around 3 percent in the near future. However, the indicator does not take account of the full extent of the crisis and is currently too optimistic.
    Source: Bloomberg
  • Across the eurozone as a whole, economic output fell by 0.7 percent in the fourth quarter 2020. The steepest downturn was recorded in Austria (–4.7 percent), where the absence of winter tourism had a major impact. The large nations of Italy (–2 percent), France (–1.3 percent) and Germany (+0.1 percent) fared better than expected in light of the circumstances.

    In contrast to the USA, further decline in economic output is anticipated in the eurozone in the first quarter before the recovery can continue. This is due to ongoing strict coronavirus measures. The mood in industry is more upbeat. Markit’s sentiment indicator is close to a three-year high, at 54.8 points. Industrial production and exports returned almost to the previous year’s level, coming in at –0.1 percent and –1 percent respectively.

    Growth, sentiment and trend

    In percent

    The graphic shows the growth in real GDP, its trend and a leading economic climate indicator for the eurozone since 1995. The leading indicator points to economic growth of around –1 percent in the near future. However, the indicator does not take account of the full extent of the crisis and is currently too optimistic.
    Source: Bloomberg
  • China achieved impressive growth rates last year in spite of coronavirus. In the fourth quarter, growth stood at 6.5 percent year-on-year – according to official figures, at least. Containment measures in response to local virus outbreaks saw the leading indicators for both industry and the services sector fall quite sharply over the past two months. The Chinese New Year celebrations were also held under very different conditions from usual – Beijing discouraged citizens from travelling home to see family. This illustrates that the situation has not completely returned to normal, even in China.

    India, meanwhile, can expect a strong recovery this year. After being severely hit by coronavirus last year, this year’s growth forecasts for India are higher than in most other industrial countries and emerging markets. Central government announced generous fiscal measures, and sentiment in industry is optimistic.

    Growth, sentiment and trend

    In percent

    This graphic shows the growth in real GDP, its trend and a leading economic climate indicator for an average of emerging markets since 1995. The leading indicator points to economic growth of around 3 percent in the near future.
    Source: Bloomberg

Global economic data

IndicatorsSwitzerlandUSAEurozoneUKJapanIndiaBrazilChina  
Indicators
GDP Y/Y 2020Q3
Switzerland
–1.6%
USA
–2.8%
Eurozone
–4.3%
UK
–8.7%
Japan
–5.8%
India
–7.5%
Brazil
–3.9%
China  
4.9%
Indicators
GDP Y/Y 2020Q4
Switzerland
n/a
USA
–2.5%
Eurozone
–5.1%
UK
–7.8%
Japan
–1.2%
India
n/a
Brazil
n/a
China  
6.5%
Indicators
Economic climate
Switzerland
=
USA
=
Eurozone
=
UK
=
Japan
+
India
+
Brazil
+
China  
+
Indicators
Trend growth
Switzerland
1.4%
USA
1.6%
Eurozone
0.8%
UK
1.6%
Japan
1.0%
India
5.0%
Brazil
1.0%
China  
4.2%
Indicators
Inflation
Switzerland
–0.5%
USA
1.4%
Eurozone
0.9%
UK
0.6%
Japan
–1.2%
India
4.1%
Brazil
4.6%
China  
–0.3%
Indicators
Key rates
Switzerland
–0.75%
USA
0.25%
Eurozone
0.00%
UK
0.10%
Japan
–0.10%
India
4.00%
Brazil
2.00%
China  
3.85%
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