Geneva's growth will stabilise in 2020
Geneva's GDP is expected to grow by 1.5 % in 2020 and should thus remain relatively stable compared to 2019 (1.7 %).
Source: Thomson Reuters, BCGE.
The data contained in this document is based on reliable statistics: it does not, however, engage the responsibility of BCGE.
Switzerland: growth remains stable
The slight improvement in world trade sends a positive signal to Swiss companies whose order books should find export opportunities in 2020. The new year should thus be characterised by a moderate economic growth if geopolitical tensions do not jeopardise the fundamentals. However, moderate growth suggests that a further reduction in the unemployment rate is unlikely, as the pace of job creation is expected to slow after the strong increase in 2018.
Inflation in Switzerland continued to fall and is now negative due to pressure from the sharp decline in imported goods. Risks of deflation are nevertheless limited due to underlying domestic strengths, which do not require any special measures on the part of the SNB.
As in previous years, the Swiss National Bank (SNB) is pursuing an extremely accommodating monetary policy modelled on that of the European Central Bank (ECB) and limits the appreciation of the Swiss franc through its exchange rate interventions. This policy is unlikely to change in 2020. In this environment, 10-year interest rates will fluctuate within a limited range of volatility and will continue to be sensitive to temporary changes in sentiment.
The same applies to the Swiss franc, which is experiencing a structural appreciation that the SNB is trying to limit. Against this backdrop, the Swiss franc could fluctuate and temporarily weaken when there is a more optimistic outlook for the global situation.
Geneva: exports drive growth
In 2020, Geneva's GDP is expected to grow by 1.5% compared to 1.7% expected in 2019 (GDP for 2018 was CHF 52.322 billion). This trend will continue to be driven by the non-cyclical sectors, particularly pharmaceuticals and chemicals, which are growing export sectors and which, over the first three quarters of the year, exceeded the CHF 16 billion mark. The corporate services sector and the real estate and hotel sectors continue to develop dynamically. In the third quarter of 2019, the hotel industry recorded the highest number of overnight stays recorded over the past three months and a 5.0% increase year- on-year.
In the real estate market, the third quarter saw a boom in transactions with a total value of CHF 1.192 billion. The market is in an adjustment phase with a significant increase in the value of co-ownership housing transactions (+36%), which should be seen in parallel with the decline in the value of individual housing transactions (-12%). On the employment front, the unemployment rate fell below the 4% mark for the first time in 18 years. New jobs should continue to be created, ensuring full employment in Geneva. However, the pace is likely to slow in 2020.
The bank recommends that companies carry out a thorough analysis of their financial options, particularly in terms of debt and liquidity management, in order to best neutralise or even benefit from the impact of negative interest rates. Private individuals may be able to avoid a surplus of cash and liquid assets through an annual financial check-up combined with a wealth analysis and thus achieve an optimal diversification of their assets.