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Created on 24.05.2019

Gloomy outlook despite strong recent performance

Encouraging growth in national income was recorded in the eurozone and the USA in the first quarter of 2019. However, the latest economic data from China is disappointing. Weaker global sentiment data means there is little scope for further economic weakness. Despite this, a recession is not foreseeable.

  • The economic outlook in Switzerland deteriorated last month. Consumer confidence fell again after briefly improving during the first quarter. Factors behind the decline in this barometer included consumers taking a more negative view of the labour market situation and their own job and financial circumstances than before. As far as business is concerned, in April the purchasing managers’ index (PMI) fell into territory that indicates a slowdown in industry for the first time since 2015. This level correlates with signals from other industrial statistics, which have been losing ground for months. In the near future, however, the overall economy can expect further growth impetus from the export industry and services sector.

    Growth, sentiment and trend

    In percent

    The graphic shows the annual growth in Swiss gross domestic product (GDP), its trend and a leading economic climate indicator. The latter sentiment barometer deteriorated again recently. In a long-term comparison, the figures for all three indicators are in the average range and just below 2%.

    The Swiss economic climate weakened again last month. The sentiment ratings indicate growth close to the long-term trend for the coming months.

  • The USA posted strong economic growth in the opening quarter of 2019. Yet, its composition was unconvincing. Growth was mainly driven by components, such as government spending, which are very susceptible to fluctuations. By contrast, private consumption and investment – the pillars of the US economy – performed modestly. Looking ahead to the coming months, the latest data points to another upturn in consumption. This was again much more robust by the end of the first quarter of 2019. The survey results remain at a high level and the employment market figures were once again strong in April. The situation for companies is nevertheless weaker than last month. There was a decline in sentiment for both industry and the services sector. The poorer figures for effective industrial production confirm the fading dynamism.

    Growth, sentiment and trend

    In percent

    The graphic shows the growth in real US GDP, its trend and a leading economic climate indicator. After surprisingly strong GDP growth in the first quarter of 2019, the survey results in April improved for consumers and worsened for companies. However, they still show a historically high level of optimism.

    The economic outlook in the USA deteriorated in both industry and the services sector last month. The climate for the entire US economy means we can expect a moderate decline in growth in the near future.

  • According to initial estimates on economic growth, the eurozone got off to a strong start in the new year. No data on individual GDP components is available yet. However, the figures from the member states suggest that the construction sector was a major growth driver in the opening quarter of 2019. This applies in particular to Germany, the largest European economy. Besides private consumption, construction – thanks to the mild weather – ensured that the economy picked up noticeably from the downturn in the second half of 2018. Nevertheless, new sentiment data again points to a weaker economy in the eurozone. Industrial data posted a further sharp fall in April. However, the results of the survey barometer were also lower among consumers and retailers.

    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. Although sentiment has deteriorated significantly in the eurozone recently, it nevertheless remains at a high level in a long-term comparison.

    The economic climate in the eurozone deteriorated slightly again in April. However, advance GDP growth figures from the first quarter of 2019 indicate that the eurozone made a strong start to the new year.

  • The latest economic data from China was disappointing. Total production growth in industry declined. Sentiment among industrial companies also worsened in April. The growth figures for investment indicate that the government’s attempts to boost the economy have not yet had the desired impact. After increasing temporarily in March, investment growth slipped back again in April. There were mixed signals from domestic demand in April: while imports posted robust growth, retail figures were disappointing. As far as other significant emerging markets are concerned, the sentiment-related boost from the election of Jair Bolsonaro in Brazil has now subsided. Meanwhile growth figures for the first quarter in Russia were poor.

    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. After years of strong growth, economic dynamism has slowed significantly as expected. This means it remains close to its long-term trend.

    Sentiment varied widely across emerging markets last month. The losers in terms of sentiment included the BRIC states. The economic climate currently points to stable growth.

Global economic data

Indicator
Switzerland
USA
Eurozone
UK
Japan
India
Brazil
China   
GDP Y/Y 2018Q4
1,5%
3,0%
1,1%
1,4%
0,2%
6,6%
1,1%
6,4%
GDP Y/Y 2019Q1
N/A
3,2%
1,2%
1,8%
0,8%
N/A
N/A
6,4%
Economic climate
+
-
+
-
+
+
+
-
Trend growth
1,5%
2,0%
1,2
1,8%
0,8%
7,0%
0,6%
5,9%
Inflation
0,7%
2,0%
1,7%
1,9%
0,5%
2,9%
4,9%
2,5%
Key rates
-0,75%
2,44%
0,00%
0,75%
-0,10%
6,00%
6,50%
4,35%
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