Switzerland's economy grows less than expected in Q2

The State Secretariat for Economic Affairs (SECO) revealed on Thursday that Switzerland's gross domestic product (GDP) rose 1.8 percent q-o-q in the second quarter of 2021, after a revised 0.4 percent q-o-q contraction in the previous quarter (originally a 0.5 percent q-o-q decrease).

Economists had forecast the Swiss economy would expand by 2.0 percent q-o-q.

According to the report, value-added grew markedly in the service sector as a result of eased coronavirus restrictions. Accommodation and food services surged 48.9 percent q-o-q, recovering after setbacks in the winter quarters. Arts, entertainment and recreation also registered strong growth – by 52.9 percent q-o-q - thanks to less restrictive measures. In addition, trade increased 4.8 percent q-o-q as brick-and-mortar businesses reopened. Meanwhile, the industry’s growth decelerates, normalizing after the strong rebound in the previous quarters.

With the easing of COVID measures, private consumption recovered strongly, recording a 4.1 percent q-o-q rise. Expansion in government consumption accelerated to 5.5 percent q-o-q due to extraordinary expenditure to cope with the pandemic. Investment in equipment jumped 1.6 percent q-o-q, while construction investment edged up 0.1 percent q-o-q. Overall, domestic demand rose strongly, which was accompanied by a slight increase in imports (+0.5 percent q-o-q).

In y-o-y terms, Swiss GDP grew 7.7 percent in the second quarter, following a revised 0.7 percent decline in the first quarter (originally a drop of 0.5 percent). This represented the strongest growth on record but was below economists’ forecasts for a 9.0 percent advance.