Economy: Turning point in global economic climate

The recovery has peaked in China and the USA. The economy in Europe is still running at full tilt, but the Delta variant could hamper these plans.

  • In the second quarter, the Swiss economy was boosted by the extensive relaxation of coronavirus restrictions. According to SECO’s Index of Weekly Economic Activity (WEA), Swiss economic activity had already exceeded the pre-crisis level by 1 percent in June. Optimism in the services sector is particularly high. The labour market is also faring well: the rate of unemployment has continually declined since the start of the year and fell again to 2.8 percent in June. By contrast, the recovery already seems to have peaked in industry. After reaching a new record high in May, sentiment amongst purchasing managers deteriorated slightly in June. Momentum is flattening out, albeit still at a very high level.

    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 2 percent in the near future. Due to coronavirus-related effects, however, growth will be below our indicator in the first quarter and well above it in the second quarter.
    Source: Bloomberg
  • The US economy has displayed impressive recovery momentum over recent months and overcame the coronavirus-related slump in less than a year. The economic outlook remains bright, but the rapid pace cannot be maintained. The leading indicators in industry are already pointing to a normalization of growth rates. Despite this, the situation on the US labour market remains tight. At 9.2 million, the number of job vacancies reached a new record high in May. However, this has not so far created wage pressure on a broad basis. In contrast, consumer price inflation in June climbed by a further 0.4 percentage points to 5.4 percent. The main factor behind this rise remains the price trend for used cars and energy.

    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 4 percent in the near future. Due to coronavirus-related effects, however, growth will be well above our indicator in the second quarter.
    Source: Bloomberg
  • With the start of summer, the final restrictions have also been removed in the eurozone, lending further impetus to the economic recovery. In contrast to China and the USA, the shortfall compared to pre-crisis levels has not yet been recovered in Europe. This means that there is great recovery potential. The leading indicators for industry and the services sector climbed again recently, reinforcing the prevailing optimism. Not only did order intake at industrial companies hit its highest level for 21 years in June, consumer confidence also reached a level not seen since 1990, 2000 and 2018. Only a further spread of the Delta variant could currently dampen the buoyant mood. Price performance in the eurozone is much more moderate than in the USA. In June, the rate of inflation even fell slightly year-on-year, from 2 percent to 1.9 percent. This is in line with the European Central Bank’s inflation target.

    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 4 percent in the near future. Due to coronavirus-related effects, however, growth will be well above our indicator in the second quarter.
    Source: Bloomberg
  • Many emerging markets have been very severely hit by the coronavirus outbreak and the recession it has triggered. The rapid spread of the Delta variant abruptly interrupted recovery growth recently. Countries including Indonesia, South Korea, Malaysia and Russia reintroduced restrictions and social-distancing measures, which may set economic recovery back.

    While China has been spared by the Delta variant so far, the Chinese economy also lost momentum recently. In the second quarter, economic growth stood at just 7.9 percent compared to the weak prior year. The Chinese government has already started to take countermeasures, by further relaxing lending requirements on banks. Exports continue to perform well, however. Growth for June came in at around 32 percent year-on-year.

    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 5 percent in the near future. Due to coronavirus-related effects, however, growth will be well above our indicator in the second quarter.
    Source: Bloomberg

Global economic data

IndicatorsSwitzerlandUSAEurozoneUKJapanIndiaBrazilChina  
Indicators
GDP Y/Y 2021Q1
Switzerland
–0.5%
USA
0.4%
Eurozone
–1.3%
UK
–6.1%
Japan
–1.6%
India
1.6%
Brazil
1.0%
China  
18.3%
Indicators
GDP Y/Y 2021Q2
Switzerland
n/a
USA
n/a
Eurozone
n/a
UK
n/a
Japan
n/a
India
n/a
Brazil
n/a
China  
7.9%
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
1.1%
China  
4.2%
Indicators
Inflation
Switzerland
0.6%
USA
5.4%
Eurozone
1.9%
UK
2.5%
Japan
–0.1%
India
6.3%
Brazil
8.4%
China  
1.1%
Indicators
Key rates
Switzerland
–0.75%
USA
0.10%
Eurozone
0.00%
UK
0.10%
Japan
–0.10%
India
4.00%
Brazil
4.25%
China  
4.35%
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