The war in Ukraine, the sanctions against Russia as well as the rise in the prices of raw materials and energy have exacerbated several imbalances already present.
The economy of Vaud suffered the effects of the deterioration in the world economy. While its gross domestic product (GDP) should continue to increase this year and next year, forecasts have been revised significantly downwards. Thus, Vaud’s GDP is expected to rise by 2.5% this year and 1.4% next year, according to the latest values from the CREA, published by the BCV, the State of Vaud and the CVCI. And this, while the forecasts published in July were counting on increases of 2.8% and 2.5% respectively. The degree of uncertainty is high due in particular to geopolitical tensions, rising prices and interest rates, the slowdown in the global economy and the energy crisis affecting many countries.
The International Monetary Fund (IMF) lowered its forecast again last week. While its growth estimate for the world economy has not changed for 2022 (+3.2%), it is lower for 2023 (+2.7%) than in the July World Economic Outlook ( +2.9%). Compared to its January forecasts, the downward revision is very significant: at the start of the year, the IMF was still expecting global growth of 4.4% this year and 3.8% next year. The forecasts for the canton of Vaud have moved in the same direction: in January, they still referred to growth of 3.6% in 2022 and 1.9% next year, i.e. one point and half a point respectively. percentage more than at present. The same is true at the national level: the State Secretariat for Economic Affairs (SECO) expects Swiss GDP to rise by 2.0% in 2022 and 1.1% in 2023, whereas it was there is still talk of increases of 3.0% and 2.0% respectively in January.
These downward revisions are explained by a troubled global context. The war in Ukraine, the sanctions against Russia as well as the rise in the prices of raw materials and energy have exacerbated several imbalances already present. Inflation made a strong comeback, interest rates rose and central banks began to drastically tighten their monetary policy. In Switzerland, prices rose in September at an annual rate of 3.3%.
Thanks to the strength of the franc, the inflation is however less strong than in the euro zone (+10.0% in September) or in the United States (+8.2%). The Swiss National Bank, however, began to rapidly raise its key rate, which returned to positive territory: in a few months, it fell from -0.75% to 0.50%.
The degree of uncertainty is high. Many countries, including Switzerland, face the risk of energy shortages in winter. Moreover, the COVID-19 pandemic is not over, as shown by the rise in contamination in Europe or the localized confinements in China, and supply chains remain disrupted. As far as Switzerland is concerned, other risk factors lie in a possible continued appreciation of the franc, in the uncertainty linked to relations with the European Union or in the implementation of a global minimum tax.
At branch level, after a widely shared rebound in 2021, the recovery should continue for the majority of them. Chemicals-pharma, public and parapublic services as well as transport and communications should post strong growth (more than 2%) this year and next year.
The hotel and catering industry is in the same situation, which reflects a catch-up after a collapse in activity in 2020. In financial services, moderate growth (from 0.5% to 2%) is expected in 2022 and 2023 For trade, a moderate increase in activity this year could be followed by a strong increase next year.
Construction could see a downturn in activity, strong in 2022 (beyond -2%) and moderate in 2023 (between -0.5% and -2%). In the machinery and watchmaking industry, after strong growth this year, a sharp decline is possible next year. A slowdown is also expected in real estate activities and business services, with moderate growth in 2022 and stagnation (change between -0.5% and 0.5%) in 2023.
Four publications per year
GDP is an essential indicator for assessing the dynamism of an economy. Vaud’s GDP has been published since 2009. To guarantee a rigorous and transparent calculation, the BCV, the State of Vaud, represented by the Department for the Promotion of the Economy and Innovation and Statistics Vaud, as well as the CVCI have mandated the CREA Institute of Applied Economics of the HEC Faculty of the University of Lausanne. CREA’s methodology notably incorporates cantonal GDP estimates from the Federal Statistical Office. Since January 2019, the data has been corrected for the effects of major international sporting events.
Vaud’s GDP is published four times a year (next publication: January 2023). Managers of the private economy and political decision-makers thus have access to up-to-date data and forecasts at all times, in order to be able to better prepare their decisions and steer their projects.