The economy of Switzerland had moderate growth in the third quarter of 2024 as its quarterly growth was only 0.4% while, compared to the preceding quarter, it had declined to this extent from a quarter-on-quarter growth rate of 0.6%. Growth rate of GDP was rather subdued at 0.2% compared to the previous quarter when it stood at 0.4%. However, this was due to sporting events.

Trade was actually the main engine of expansion, with exports increasing by 1.4%. This signaled a significant rebound after four or five quarters of lowly performance. Private expenditure, too, was healthy at 0.5% above the historical norm, while government spending and investment on construction were also up in the quarter.

However, several industries are in a contraction phase. The health and social services industry could grow only by 0.5%, but financial services contracted by 2.3%. Investment in machineries, vehicles, and IT equipment decreased by 1.3%. Import contracted by 0.4%. The major sector that contracted is manufacturing with a contraction of 1.1%. While the chemical and pharmaceutical industries grew at a very minimal rate of 0.2%, this was the worst rate of growth in several quarters following a very strong previous quarter.

Economists cited a variety of factors for the disappointing performance, including the slowing of other European economies. Philippe Bacchetta, professor of macroeconomics at the University of Lausanne, stressed that Switzerland’s very open economy is heavily dependent on the state of conditions in its European trading partners. Nevertheless, Bacchetta pointed out that domestic consumption remains strong and expects a stable short-term outlook with steady consumption, subdued exports, and weak investment. He warned, however, that geopolitical uncertainties and a low level of investment may create risks for the economy in the medium term.

A professor at the University of Fribourg, Sergio Rossi, also stresses a pull-back in exports, this time from geopolitical tensions and recession in Germany.

He also underscored that Swiss firms, especially in the automotive supply chain, are experiencing problems because the European car manufacturers are under pressure too. Moreover, governmental decisions on cutting public deficits through cuts in spending would further depress investment and hiring, for which the landscape of the Swiss economy looks less promising in the near future.