The Swiss economy is likely to be confirmed as being officially in recession on Friday.
That’s according to international news agency, Reuters. If it does so, it will be the first time that Switzerland has fallen into recession since 2009 at the heart of the global financial crisis.
The expected news confirms the well-documented struggles that its economy has faced since the Swiss National Bank’s surprise decision in January to allow the Swiss franc to trade freely with the euro.
The Reuters poll of 12 analysts forecasts the $690 billion Swiss economy shrank 0.1% in the second quarter, which is on the back of a 0.2% contraction in the previous quarter.
As WatchPro has been reporting over the past few months, some of the hardest hit companies have been Swiss watchmaking giants, including Richemont and Swatch Group, as most of their parts have to be manufactured locally in order to qualify for the priceless ‘Swiss Made’ label.
A silver lining to this cloud is that economists expect the Swiss downturn to be short-lived. Jan-Egbert Sturm, a director of the KOF Swiss Economic Institute think tank, went as far as to say: “You do see that the strong Swiss franc is having its toll on the Swiss economy, but at the end of January we thought the results would be even more devastating.”
Despite the unwelcome Chinese slowdown of the last few days, some economists have said that a weakening franc, coupled with more optimism for euro zone demand, mean that there could even be overall growth for Switzerland in 2015.
It’s hoped that this potential overall growth will trickle down to the Swiss watchmaking industry, whose July results were terrible, according to data from the Federation of the Swiss watch industry. In its report last month, it announced that exports were down 9.3% from July 2014, with sales in Asia down an eye-watering 21.4%.