The Swiss retail sector suffered another sharp decline in revenue in February due to shop closures, falling -6.3% compared to the previous year. Shops reopened on 1 March, and significant catch-up effects are anticipated, as happened last year. Thanks to the reopening, economic output in the first quarter will decline less steeply than originally feared. The real-time indicator on weekly economic activity published by SECO points to negative quarterly growth of “just” -0.5% in the first quarter. Surprisingly, seasonally-adjusted unemployment fell in March from 3.4 to 3.3%. The inflation rate recently stood at -0.2%. Although prices are set to rise in the near future, inflation in Switzerland is very low by international comparison.
Economy: Inflation soars
A year ago, coronavirus caused oil and commodity prices to collapse. Prices and the global economy have both since recovered, which has resulted in a rise in inflation rates year-on-year. Some emerging markets have been forced to raise key rates due to rising inflation.
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Growth, sentiment and trend
In percent
Source: Bloomberg -
March revenues in the US retail sector were up 9.8% on the previous month and reached a new record high. Industrial production exceeded the pre-crisis level, climbing by 1% year-on-year. This means that the coronavirus crisis in the USA has largely been overcome from an economic perspective – unlike in Europe.
The outlook is also bright. ISM Manufacturing, which measures sentiment amongst industrial companies, climbed to its highest level since 1983 in March. Only the unemployment figure is still well above the pre-crisis level. However, with almost a million new jobs created in March, the trend also points to recovery in this area. Inflation soared in March, rising from 1.7 to 2.6%. Provided that inflation remains above 2% temporarily, however, the US Federal Reserve is not expected to raise interest rates.
Growth, sentiment and trend
In percent
Source: Bloomberg -
As in the USA, industry in the eurozone is in a buoyant mood – the indicator reached a 24-year high in March. The situation in the services sector is completely different, however. Owing to fresh lockdown measures, retail revenues in March came in at around 3% below the already weak figures for the same month in the prior year. It is also clear that the economies in central and eastern European countries are currently being just as severely affected as their southern European counterparts, which were hit much worse in 2020. For example, retail revenues in March stood at a similarly negative level in Germany (-5.3%) and in Italy (-5.6%), whereas France’s figures were actually in positive territory, at 1.6%.
Growth, sentiment and trend
In percent
Source: Bloomberg -
According to official figures, China’s first-quarter economic output was up by 0.6% on the previous quarter. Despite strong momentum, China is still not yet building on the high pre-pandemic growth rates. During the first quarter, the Chinese government imposed drastic measures in response to new local outbreaks of coronavirus. The government also advised citizens against travel during the Chinese New Year celebrations. Consumption continues to recover, but has not yet reached pre-coronavirus normality.
In Brazil, where a new variant of the virus is rampant, sentiment has deteriorated significantly in recent times. The index that measures sentiment in industry fell from 58.4 to 52.8 points, while the services sector index slipped from 47.1 to 44.1 points. No impetus is expected from monetary policy, despite the challenging situation. The central bank was compelled to raise the key rate from 2 to 2.75% owing to high inflation (most recently 6.1%) and a depreciating currency.
Growth, sentiment and trend
In percent
Source: Bloomberg
Global economic data
| Indicators | Switzerland | USA | Eurozone | UK | Japan | India | Brazil | China |
|---|---|---|---|---|---|---|---|---|
| Indicators GDP Y/Y 2020Q4 | Switzerland –1.6% | USA –2.4% | Eurozone –4.9% | UK –7.3% | Japan –1.4% | India 0.4% | Brazil –1.1% | China 6.5% |
| Indicators GDP Y/Y 2021Q1 | Switzerland | USA | Eurozone | UK | Japan | India | Brazil | China 18.3% |
| Indicators Economic climate | Switzerland = | USA + | Eurozone = | UK + | Japan = | India + | Brazil = | China + |
| Indicators Trend growth | Switzerland 1.4% | USA 1.6% | Eurozone 0.9% | UK 1.6% | Japan 1.0% | India 5.0% | Brazil 1.0% | China 4.2% |
| Indicators Inflation | Switzerland –0.2% | USA 2.6% | Eurozone 1.3% | UK 0.4% | Japan –0.4% | India 5.5% | Brazil 6.1% | China 0.4% |
| Indicators Key rates | Switzerland –0.75% | USA 0.25% | Eurozone 0.00% | UK 0.10% | Japan –0.10% | India 4.00% | Brazil 2.75% | China 3.85% |