Economy: Economies look ahead

In Switzerland, many industrial companies brought their US orders forward in an effort to pre-empt the tariffs already announced. In March, the volume of non-pharmaceutical goods exported rose more than fivefold compared to the same month last year. However, companies see this increase as a one-off effect and expect a significant decline in business in the coming months. Sentiment in industry has clearly slipped back into negative territory. The situation is somewhat more stable among service providers, who continue to benefit from robust domestic demand. The latest inflation data has also caused a stir. The inflation rate fell to 0 percent, increasing the likelihood of further interest rate cuts by the Swiss National Bank (SNB).

Growth, sentiment and trend

In percent

According to official estimates, the US economy contracted slightly in the first quarter of 2025. However, these figures probably cast economic performance in a somewhat overly negative light, as the sharp rise in imports following the trade restrictions, both threatened and in some cases already implemented, is depressing national income in purely arithmetic terms. That said, we have not yet seen any real economic downturn: business sentiment continues to be stable at a rather low level and the labour market remains close to full capacity. Conversely, private consumption has weakened significantly. Of the strong demand underpinning growth in recent years remains, barely half remains. This is hardly surprising given the sharp decline in consumer confidence. We'll only see the extent to which the latest trade policy measures are placing additional strain on the economy over the course of the year.

Growth, sentiment and trend

In percent

In the eurozone, economic output grew by 0.4 percent overall, performing somewhat more strongly than in the preceding quarters. However, this rise is less likely to do with any broad-based upswing and more the result of companies bringing forward US orders in response to the threat of trade restrictions. The sluggish recent recovery in business sentiment reinforces this view. Despite subdued economic momentum, inflation picked up again slightly: core inflation rose from 2.4 to 2.7 percent in April. Nevertheless, the financial markets are expecting further interest rate cuts from the European Central Bank (ECB).

Growth, sentiment and trend

In percent

India continues to be the engine of growth among the emerging markets. Its economy is benefiting both from robust international demand as well as strong population growth and rising domestic demand. Business sentiment also continues to point to brisk business activity. Performance in Indonesia is similarly positive at the moment. The situation is much more difficult in Brazil, where the economy is cooling noticeably. China is also lagging behind expectations: the world's second-largest economy is slowing due to the ongoing real estate crisis and deep-seated structural problems. The slowdown is being exacerbated by an escalating trade conflict with the USA. Against this backdrop, the Chinese government’s fiscal policy support measures have so far proven largely ineffective.

Growth, sentiment and trend

In percent