Sentiment in the Swiss economy remains negative. Industrial companies have scaled down production recently, and, given lower order volumes, are even more cautious about the future business climate. Sentiment in the services sector also deteriorated slightly last month. Given weak momentum on the demand side, there’s unlikely to be much change in these slowdown trends for the Swiss economy in the near future. Swiss consumers are still concerned about their financial situation and remain cautious. That’s clearly reflected in price-adjusted retail sales figures, which have fallen sharply over recent months. There’s positive news on inflation, which fell from 2.9 to 2.6 percent in April. Yet, inflationary pressure remains high in view of stagnating core inflation rates and the expected rise in the reference interest rate. In this context and in light of the significant interest rate differences in comparison with its European neighbours, the Swiss National Bank may consider further interest rate hikes.

Growth, sentiment and trend

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There have been growing signs of an economic slowdown in the USA for some time. In the first quarter of this year, economic growth fell by half compared with the previous quarter and, at 0.3 percent, stands at just over the threshold for positive growth. Both supply and demand indicators point to a recessionary period. Weak import figures, easing wage growth and more cautious lending by banks indicate the domestic economy will continue to slow down over the coming months. The inflation trend is equally concerning. Although overall inflation rates fell sharply over recent months, core inflation rates – which exclude volatile price fluctuations – remain persistently high and have still not fallen significantly. In this climate, the US Federal Reserve isn’t expected to cut policy rates rapidly.

Growth, sentiment and trend

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Economic activity in the eurozone stagnated in the first quarter of this year (+0.1 percent), indicating zero growth for the second time in a row. The huge ongoing gap between the industrial and services sectors is remarkable. While industrial companies have faced low capacity utilization and weak order volumes for some time, the business climate in the services sector remains positive. This means consumption is increasingly shifting from goods to services. However, consumer confidence is still low overall. Even the positive situation on the labour market, with a historically low unemployment rate, has failed to change that. Rising prices are probably exerting the greatest strain. With the inflation rate currently standing at 7.0 percent, pressure on people’s purchasing power remains extremely high. The European Central Bank is likely to raise interest rates further in this climate.

Growth, sentiment and trend

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The initial economic euphoria after the lifting of COVID measures has gradually given way to a slightly more restrained, though still positive mood and outlook about future economic development in China. The improved sentiment figures in recent months and strong export numbers clearly point to a gradual recovery trend. However, relatively weak import figures and low inflation rates indicate that domestic demand hasn’t quite reached the pre-crisis level yet. Overall, economic growth in the emerging economies is more promising than in the industrial nations. The standout countries are India and Indonesia, which are both experiencing an economic upturn.

Growth, sentiment and trend

In percent