Friday, November 30, 2012

30/11/2012: 'Other' European SOE is back in growth

While the euro area zombie economy continues to contract (more on this later tonight) that shrunk 0.6% y/y in Q3, Swiss economy is expanding, after posting a contraction in Q2 2012. That's right - that 'other Europe' SOE is expanding despite the fact CHF is tied to the sick euro. Swiss economy grew 0.6% q/q in Q3 2012 at annualized rate of 2.3%, beating consensus expectations (+0.2% q/q). In Q2 2012 Swiss economy contracted 0.5% annualized.

Today’s GDP data were encouraging but other indicators including the manufacturing PMI (see chart below) have remained weaker recently. Overall, our forecasts for Swiss GDP growth remain unchanged: 1.0% for the full year 2012 and 1.5% for 2013. Y/y growth was +0.3% in Q2 2012 (a downward revision from +0.5% estimate) and +1.4% in Q3 2012.

Swiss growth was driven by exports which rose 1.2% y/y in Q3 2012 and domestic consumption which was up 2.5% y/y. However, fixed investment fell on quarterly basis, although remaining up 1.4% on y/y basis.

Switzerland recorded an increase of 2.8% in foreign resident population (inward migration) between 2010 and 2011 - a trend that is most likely remained in 2012. In Q3 2012 employment grew at 1.9% y/y and is now 1.9% above the pre-crisis peak levels. Meanwhile, euro area employment is 2.6% below the pre-crisis peak levels, while in the US employment is still 3.1% down on pre-crisis levels.

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