Economic prospects: Consolidation of economic recovery and slight growth acceleration

The Brexit decision created smaller effects on the economy in Switzerland and the rest of the world than expected.

In general, in the last quarter the Swiss economy has recovered from the turbulences around the removal of the exchange rate floor on the euro. The GDP growth of Switzerland has accelerated continually since the last quarter of 2015 and was further supported by the economic sectors in the first half-year of 2016. The latest developments of various indicators suggest that the local economy will grow further in the second half-year of 2016, but less dynamically than in the previous second quarter.

Brexit - Dominant topic in the first half-year of 2016

Prior to the vote, the financial markets were focussing on the United Kingdom remaining in the EU. Accordingly, the first reactions of the market were severe directly after the results of the vote came out on 23 June. Today it is clear that this was an overreaction, and the markets have clearly recovered since then. But the volatility and uncertainty is and remains relatively high, the best example of this being the new crash of the British pound at the beginning of October. Where the concrete result of negotiations between “hard” and “soft” Brexit is effected, is crucial for the future development and the relationship between the partners.

The uncertain environment and the possible implications on the economy have caused analysts to retract their forecasts for the economic growth of the United Kingdom in the short run (SwissLife for 2016: +1.9%, 2017: +0.6%). In 2018 the growth will be close to what it would have been without Brexit. The effects on the economy of Switzerland, on the EU, as well as on the world economy are considerably less than what was originally feared.

World economic conditions

According to the federal expert group, the unsteady development of the world economy came to a halt in the first half-year of 2016. In the Euro area, the GDP growth levelled out somewhat more modestly in the following quarter after a strong first quarter (+0.5% to +0.3%). In the U.S., the expansion did not meet expectations (second quarter +0.3%). In emerging markets, the economic trough seems to have been gradually reached after a restrained development.

The expansive impulses of monetary and fiscal policy as well as continuously low energy prices are nevertheless a positive signal for the future development of the European economy. Thus, for example, in the last meeting of the Federal Open Market Committee of the U.S. central bank, it was narrowly decided not to increase the U.S. prime rate. The federal experts therefore expect a continuation of moderate economic recovery and a gradual strengthening of global expansion for next year. For the current and the coming year they predict growth rates of +1.6% for the E.U. (U.S.A. +1.5% or +2.2%).


At the end of 2015 and in the first half-year of 2016 the Swiss economy has recovered. The GDP growth amounted to +0.6% in the second quarter of 2016 (first quarter +0.3%). Thereby, further growth of the various economic sectors was observed; above all domestically-oriented government-related as well as private services clearly expanded. In addition, in industry and in tourism, the first signs of an easing of the tension caused by the strong Euro can be seen. Foreign trade thus develops solidly and in the retail trade and in tourism a turnaround of the trend becomes apparent. According to SECO, the situation within individual sectors, however, is heterogeneous.

As Switzerland is very dependent on global development and in particular the economic recovery of foreign countries, a slow consolidation of economic recovery can be assumed under the leading worldwide economic frame conditions (2016: +1.6%, 2017: +1.7%). Domestically, positive impulses come from foreign trade, which is driven increasingly by the MEM industry and by tourism in addition to the pharmaceutical industry. From domestic demand a solid development is expected, but no additional acceleration. The unemployment rate may level off at 3.3% in the course of the year and in 2017.


The exchange rate situation remains tense. Above all, the capital goods industry in the Basel region is affected most. In the service sector, shopping tourism stabilised and brought about a first easing of tension for the entire trade business. In the current year, Basel-Stadt will again record a considerably more positive growth, in comparison with the whole of Switzerland. BAKBASEL corrected its growth forecast upwards for the current year by 0.6 percentage points. The current forecast for 2016 thus lies at +2.4% (2015: +2.3%). For next year an economic recovery is still expected and a growth of +2.8% is forecasted. The dominating chemical-pharmaceutical industry remains growth driving, with an above-average growth of +3.9% predicted for 2016 (2017: +4%). The reasons for this drive are, amongst others, the low dependency on the Euro and global demand trends (ageing of the world population and increasing prosperity), which lead to the sector being relatively unaffected by economic fluctuations. The unemployment rate in the city canton was at 3.7% at the end of September (season adjusted: 3.8%).

The trend in the tourism sector continued in the first half-year and 587,070 overnight stays were recorded in Basel-Stadt. In June, the 121,213 overnight stays were the the highest recorded number of overnight stays in one month ever. The art fair Art Basel as well as international conventions, among other things, contributed strongly to this good result. Until end of August the Statistical Office recorded 796,683 overnight stays, which is a slight decrease of -0.6% compared to the previous year. Against the background of a very strong year 2015 as well as the record month of June, this decrease is, however, not worrying.

Sources For economic activity and forecasts on the economy SECO “Konjunkturtendenzen Herbst 2016” (economic trends fall 2016 – in German only) and “SwissLife Volkswirtschaftlicher Ausblick Oktober 2016” (SwissLife economic outlook October 2016 – in German only), for the cantonal forecast BAK Basel Economics (status 30/09/2016) and SECO “Die Lage auf dem Arbeitsmarkt im September 2016” (The situation in the labour market in September 2016 – in German only) as well as for tourism Statistical Office of the Canton of Basel-Stadt “Statistische Mitteilung vom 14. September 2016“ (Statistical notice of 14 September 2016 – in German only).