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Charlotte de Montpellier, economist at ING, notes that the Switzerland’s GDP growth continues to surprise quarter after quarter as the GDP rose by 0.6% QoQ in 1Q19, above the consensus expectation of 0.4%.

Key Quotes

“This is stronger than the growth seen in 4Q18 (0.3%) and in 3Q18 (-0.2% QoQ), which have both been revised upward.”

“Contrary to what’s usually been the case, strong growth in 1Q was mainly due to domestic demand, particularly to consumption, which increased by 0.45% QoQ- higher than the long-term average.”

“Like its neighbours in the eurozone and Germany, 1Q growth in Switzerland was more dynamic than expected. Thanks to a positive base effect, this should enable 2019 growth to perform well, staying above 1% for the whole year. Nevertheless, this good first quarter result doesn’t change the fact that difficulties are likely to increase as the year progresses.”

“The better-than-expected Swiss GDP growth in 1Q should not change the Swiss National Bank’s monetary policy in coming months. Inflation is still low and the SNB still considers the Swiss franc to be “highly valued”. We think the main SNB rate will remain at its current level until the next business cycle, and we don’t see any rate hike over the forecast horizon.”