(Bloomberg) --
Swiss economic growth slowed slightly at the end of 2019, highlighting some fragility as it faces the impact from the coronavirus outbreak.
The fourth quarter saw declines in goods exports and machinery investment, reflecting weaker global demand and uncertainty. Overall growth was 0.3%, below the pace of the previous three months, but just above the 0.2% forecast of economists.
The lackluster data follow the flatlining seen in neighboring Germany, which has been walloped by problems in the manufacturing sector. While growth was expected to pick up this year, the impact of of the virus has pulled the rug out from under the recovery.
In the fourth quarter, Swiss growth was boosted by stronger consumer spending. A jump in aircraft investment lifted overall investment, but machinery and electrical equipment “declined in step with the international development,” the country's statistics office said.
The Organization for Economic Cooperation and Development said this week that global growth will slow this year to the weakest since the financial crisis. It also warned that the world economy could even shrink this quarter.
| Swiss Economy Overview | 4Q | 3Q |
|---|---|---|
| Household consumption | 0.4 | 0.2 |
| Government consumption | 0.5 | 0.6 |
| Equipment & software investment | 2.4 | 0.2 |
| Exports of goods excl. merchanting, valuables | -1.5 | 1.0 |
| Imports of goods excl. valuables | -2.7 | 1.3 |
| Gross domestic product | 0.3 | 0.4 |
That would spill over to Switzerland, which is heavily reliant on exports. The SECO's 2020 growth forecast of 1.7% will probably be revised down as a result of the epidemic, though it's not yet clear by how much, its director Eric Scheidegger said at the weekend.
Companies whose business has been affected by the virus will now be able to apply for a reduced-working-hour program, called Kurzarbeit in German, under which the state pays for shortfalls in workers wages.
To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net
To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net
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