Market Overview

GDP Comparison: Norway Vs. Switzerland

GDP Comparison: Norway Vs. Switzerland

Norway and Switzerland boast beautiful landscapes and are known for their neutral political stances, growth economies, strong currencies and low unemployment rates. 

Switzerland is landlocked and scattered with mountains and scenic lakes. The country is considered to be an international tax haven due to low tax levels and privacy laws.

Norway boasts fjords and has quaint cities like Bergen and Oslo. The Nordic country’s wealth is fueled by oil and gas exports, which has made it one of the richest countries.

Norway and Switzerland are not part of the European Union. The two countries are able to enjoy trade benefits with Europe due to the European Free Trade Association agreement, an organization for four states: Iceland, Liechtenstein, Norway and Switzerland.

Expect Slowdown In Norway, Switzerland  

Norway’s third-quarter GDP data confirmed that the country's economy is faring much better than Nordic peers Sweden, Finland and Denmark.

GDP for mainland Norway excluding shipping and petroleum extraction grew by 0.7% from the second to third quarter. The growth was particularly strong in July and tapered off in both August and September, Statistics Norway said in a statement.

The economy appears poised to lose some of its momentum in the coming months, said Melanie Debono, an economist at Capital Economics. 

“The 0.7% q/q increase in mainland GDP in Q3 matched Q2’s outturn and left GDP 2.9% higher than it was in July-September last year. Yet another fall in output in petroleum and ocean transport means that total GDP stagnated.” 

Norway’s expenditure breakdown is encouraging and shows that fixed mainland investment rose sharply by 5.3% in the third quarter, while household spending and government consumption both grew again by 0.4% and 0.9% respectively.

“We think the economy will slow somewhat, we still expect Norway to continue to outperform its Nordic peers over the coming two years. And we do not expect the economy to slow by enough to convince the Norges Bank to start reversing its recent series of deposit rate hikes; we expect the Bank to keep the deposit rate unchanged at 1.5% until at least the end of 2021,” the economist said. 

Swiss Stability?

The Swiss economy also grew slightly faster than expected in the second-quarter. Switzerland's GDP rose by 0.3% in the second- quarter of 2019 after increasing by 0.4% in the previous quarter.

“The 0.3% increase in GDP in Q2 was a touch higher than what we and the consensus had expected both 0.2%, although this follows a downward revision to growth in the first-quarter from 0.6%, to 0.4%,” said David Oxley, a senior Europe economist at Capital Economics.

The expenditure breakdown shows that both private and government spending rose for the third quarter in a row in the second quarter, but investment and exports of goods both declined, the economist said. 

“Looking ahead, indicators are consistent with the economy staying sluggish at best over the second half of the year. While activity in the manufacturing sector has been remarkably resilient to the deep downturn in German industry, we suspect that it will slow sharply in the second half of the year.”

The rise in the value of the franc in recent months suggests that the pressure on exporters will only have intensified in the third quarter of 2019, Oxley said. 

The State Secretariat for Economic Affairs recently released data showing consumer sentiment and expectations regarding the Swiss economy have been deteriorating; expectations for general economic development have deteriorated significantly.

Related Links: 

Germany Avoids Technical Recession, Eurozone GDP Projected To Rise 0.5% In 2020

EU Cuts Growth Forecasts For Eurozone On Global Trade Tensions


Related Articles (EWL + NORW)

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