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Germany is weakening, Italy is sick and Switzerland?

By 0.8 percent compared to the previous month fell in January, the German industrial production, seasonally adjusted. In comparison to the previous year, the slump was even greater, at 3.3 percent. The cooling of the from the point of view of the Swiss foreign trade the most important economy is stronger than expected. For 43.1 billion Swiss francs, Swiss companies export every year, goods to Germany, about 19 percent of the total exports .

For 2019, the OECD for Germany has lowered the forecast for the growth of the gross domestic product (GDP) is clear: in November, the organization of developed countries with a GDP increase of 1.6 per cent expected, now it is 0.7 percent. Already in the third quarter of 2018, the German economy contracted by 0.2 percent in the fourth quarter, it stagnated with zero growth, and is escaped so that only just one recession .

Still, Switzerland is not in the Wake of the development in Germany. A slowdown is expected here: After 2.9 percent last year, the GDP is expected to grow in this country, according to forecasters in the range of 1.5 per cent. This would not be a crisis, but rather to mean a cooling of growth that is roughly equivalent to the Swiss economy potential.

Only temporary weaknesses?

for peace seems to be from a Swiss perspective, the latest survey from the purchasing managers ' index (PMI) in the manufacturing sector, the Credit Suisse and buyers Association, Procure publishing and on surveys of buyers of large companies is based. With a value of 55.4, the PMI is still well above the threshold of 50. Values above are for growth, and lower values for a contraction. After the Swiss PMI fell from 64.6 points in August to 54.3 points in January, it increased in February.

Very different the image looks here, too, in the most important sales markets of Switzerland: from the data service provider Markit collected PMI for the Eurozone for February shows with 49.3 points a contraction of the economic activity. With 47.6 points, the PMI for Germany is even deeper and so deep as since 74 months. Even the value for Italy is 47.7 points slightly higher. Italy is the other Patient in the Eurozone. The Land is located since last summer, in a recession.

does not improve the situation in Europe in the next months, it is difficult to imagine how the Swiss economy, this downward spiral can escape. The remaining optimism is explained by the fact that, in particular, the development in Germany is only a temporary weakness. The shock last autumn, went back to the example, on new regulations on vehicles, which have since weighed heavily on car production. Some forecasters expect, therefore, soon, with significantly better Numbers out of Germany.

The OECD expects a 6.2 per cent for China. That would be the lowest growth for nearly 30 years.

reason for concern, but also the other large blocs in the world economy. "In developed countries, the industry has gone to production, in General, a strong back," says Anastassios Frangulidis, chief strategist at Pictet: "the beginning of 2018, it still grew by 4 percent, now it is rising by only 0.9 percent. Stronger it grows with 2.1 percent in the emerging countries."

But also there are worrying developments, especially in Turkey, which is already in a recession. The OECD expects the Turkish GDP goes down in the current year to 1.8 per cent lower than in 2018. In the previous year, it is still increased by 2.9 percent. In the last year achieved exports worth 1.9 billion from Switzerland, Turkey, their share in total exports amounted to 0.8 percent.

Far more is the significance of the concern for lower growth in China. Its share of Swiss exports totalled 12.2 billion last year to 5.2 percent. Growth in China, but also the indirect effects has a weakness for Switzerland, however, mainly because China is also for Europe and especially for Germany, a very important trading partner, depends on the further course of the economy by the development there.

The Chinese government has recently taken a series of measures the government expenditure to support the growth. The Bank is targeting for the current year, a growth of between 6 percent and 6.5 percent. The OECD is forecasting 6.2 per cent. That would be the lowest growth in the country for almost 30 years.

No recession without a major negative event

but Whether the global economy is cooling more than just everything other than safe. Daniel kalt, the Swiss chief economist of the UBS , refers to the recent history: "In the last ten years, there was also a growth shock in the world economy – for example, in 2011 and 2015, but both." According to the Cold it was not excluded that this is also the case again.

Anastassios Frangulidis Pictet remains generally optimistic: "Although the boom cycle would be in the summer already the longest so far," he says, however, "the absence of the usual reasons that lead to a recession: The balance sheets of the Private ones are healthy, and the real interest rates are still very low." Frangulidis adds: "There is a great need negative event to a recession."

Such negative results are not, however, exclude, as with all economic forecasters stress: a disordered Brexit, but also a Failure of the negotiations between the United States and China in the trade war, which again became more likely. Further, we will not know until may whether U.S. President Donald Trump his threat come true, and the duties on European cars increased.

For the major Central banks, the recent development is certainly enough reason to the normalization of interest rates should be suspended. For Switzerland, this means that we still have to live at least into next year with negative interest rates. However, if the economy weakens significantly more than expected, then this should be the least of the problems. Because then it won't be clear what the monetary policy to alleviate the situation at all.

(editing Tamedia)

Created: 13.03.2019, 19:28 PM

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