Economic Forecast for Basel-Stadt: Solid GDP growth in 2018, slowdown expected for 2019, positive long-term outlook
Regardless of a minor downward correction, the economy of the Canton of Basel-Stadt is still growing strongly in 2018. While economists back in June predicted annual GDP growth at 3.8% for 2018, growth is expected to slow down in 2019 due to less momentum from foreign trade.
As the friendly global economic environment shows no signs of deterioration, demand for Swiss products continues to increase. An in comparison to recent years relatively weak exchange rate of the Swiss Franc has further bolstered the export sector. In addition to what is essentially the Swiss growth engine, economic activity receives support from domestic economic factors too, according to the Swiss State Secretariat for Economic Affairs (SECO) and to Swiss research institute BAK Economics. At the same time, a gradual normalization of the global economy usually following periods with high growth is expected to materialize – with the result of decreasing momentum from foreign and international trade in Switzerland. In view of these prospects, Swiss GDP growth is predicted to slow down in 2019. SECO and BAK Economics forecasts call for GDP growth of between 2.3% and 2.4% for 2018, and still between 1.5% and 2.0% for 2019. Compared to the economic forecast in spring 2018, several negative risks were responsible for a slight downward correction. Most relevant among these are insecurity about skeleton agreement negotiations with the EU, trade conflicts between the U.S. and China, the political situation in Italy and the devaluation of the Turkish Lira.
The economic forecast for the Canton of Basel-Stadt remains in above-average territory and gives reason for much optimism – economists predicted GDP growth of 3.8% in 2018, and 2.2% in 2019 respectively (BAK Economics; status: June 2018). Decreasing unemployment numbers in Basel-Stadt mirrored the national trend in Swiss unemployment: The unemployment rate in the Canton of Basel-Stadt dropped from 3.4% to 3.2% in June 2018 and remained unchanged in July (in July 2017 unemployment was at 3.5%).
Furthermore, the long-term outlook for business activity in the Canton of Basel-Stadt is eminently positive. Compared to other cantons, Basel-Stadt stands out when it comes to high long-term growth potential, as evidenced in the recently published findings UBS’ Cantonal Competitiveness Indicator (KWI) 2018. Basel is ranked in excellent third place, shortly behind the cantons of Zug and Zurich. The balanced economic structure, a great talent pool and the innovative capacity of Basel-Stadt were key to its excellent ranking.
Sources: SECO Survey „Konjunkturtendenzen Sommer 2018“ (Economic Trends); June Forecast of BAK Economics; UBS Kantonaler Wettbewerbsindikator 2018 (Cantonal Competitiveness Indicator)
Research Assistant at Specialist Department Principles of Economics
Areas of expertise
Economic Analysis; focus areas: Regulatory Economics, Foreign and International Trade, Structural Transformation/Digitalization, Labour Market