Switzerland posted good growth rates again in the second quarter. Even though growth of 0.3 percent for the quarter and 2.4 percent year-on-year did not match the eurozone figures, there was at least a degree of normalization in the sectors previously hit by coronavirus measures. By contrast, the retail sector, the construction industry and financial service providers recorded negative growth rates. If inflation rates continue to rise over the coming months, we must brace ourselves for greater loss of purchasing power for consumers and, as a result, lower growth rates. At the start of the year in particular, the combination of higher gas and electricity prices and a sharp hike in health insurance premiums looks likely to deal a severe blow to private consumption.

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In the USA, the economic indicators also point to another slowdown in growth. In light of the negligible real growth in order intake, business sentiment is more cautious, while consumers are reacting to the trend in inflation-adjusted income, which is now clearly negative. The savings of private households, which grew during the period of generous coronavirus support, are also evidently being whittled away. This meant that there was a sharp rise in the number of people seeking employment on the labour market again last month. With salary growth rates of over 5 percent, however, there is the risk of persistent high inflation setting in.

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Europe currently remains the economic region of greatest concern to us. Unlike in the USA, inflation does not yet appear to have peaked in Europe. This is mainly due to the further increases in gas and electricity prices and the extremely high inflation for producer prices, but also to the fact that the European economy – unlike the USA’s – has been growing until now. For Germany, inflation rates of over 10 percent are forecast for the coming months. As compensating for such high figures through wages seems impossible, the eurozone – similarly to Switzerland – will face a sharp decline in private demand over the winter. 

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China’s economy failed to bounce back again last month. Business sentiment is still patchy, while consumer confidence remains at its lowest ever level. Another interest rate cut and significant depreciation of the yuan should now provide the economy with some urgently needed tailwind. Despite this, Chinese President Xi Jinping looks set to be reelected by a large majority in November. Whether the economy can actually return to attractive growth while the government maintains its strict zero-COVID strategy is doubtful. The rise in inflation has now slowed down somewhat, which also points to an economy that is simply sluggish.

Growth, sentiment and trend

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