1/4
Jan-Egbert Sturm: “The Swiss labor market is very robust.”
Christian KolbeEditor Economics
Jan-Egbert Sturm (53) receives Blick in his light-flooded corner office at the KOF business cycle research center of the ETH in Zurich. The room is dominated by a large bookshelf, which primarily serves as a background for photo and video recordings. “I only read most of it electronically,” says the KOF director, who, with his economic forecasts, is one of the most important economists in Switzerland.
Blick: According to your forecasts, the Swiss economy will grow by 0.7 percent in the coming year, and the global economy by 0.5 percent. What makes Switzerland better?
Jan Egbert Sturm: The question is always how to accurately measure the global economy. But if you put on Swiss glasses and then look at the world, then you give more weight to the countries with which we do a lot of trade. This is especially true for Europe and especially Germany, which is stuck in a recession. We, on the other hand, are more stable, produce less energy-intensively and often benefit from instability in the world. Switzerland stands for stability, security and quality. This is particularly important in such uncertain times. The world is weakening, Switzerland is showing strength.
How dramatic is the low growth of the global economy?
The world economy is going through a very clear phase of weakness. This is not good. The global economy relevant to Switzerland does not normally grow by just half a percent. Some countries will slide into recession. But the weak growth cannot be compared to the financial crisis or the pandemic, when the global economy actually contracted.
What’s different?
We will live through a phase of weakness when it comes to value creation. But the job market – you can see that in all Western countries – is really very well positioned. Job security is given. Companies have learned that it is easier to get through a relatively short phase of weakness together with the workforce than by throwing them out on the street. On the contrary: the shortage of skilled workers – the labor shortage in general – is high.
A robust labor market in a weak phase – that is a new phenomenon.
That’s certainly not what we usually read in textbooks: a downturn coupled with a skyrocketing unemployment rate. We don’t see that. We are realizing more and more how important it is that we have the staff to be able to move the business forward.
Does that also apply to Switzerland?
The Swiss labor market is very robust. Even if certain companies will have problems this winter, this will not lead to a large increase in unemployment. As a result of the experiences after the pandemic, many companies have become reluctant to make layoffs.
How great is the danger of a recession in Switzerland?
There is no threat of recession in Switzerland. It’s a weak phase, but on the whole the companies will be able to bridge this weakness well, since the order books are still quite full.
How will the Swiss economy start the new year?
It’s not even that unlikely that the first quarter will be negative. It has to do with the soccer World Cup. Fifa’s income from the World Cup in Qatar contributed to Swiss value creation in the last quarter of 2022. This income will not be available in the first quarter of 2023. However, this is more of a technical phenomenon and has little to do with economic development.
Which sectors are suffering the most from this weak phase?
Industry and export-oriented companies always suffer the most from an international economic slowdown. But the industry in particular has grown strongly in recent years, not just chemicals and pharmaceuticals, but also the other industrial sectors. These industries have done very well in recent years. This is now helping to get through this dry spell.
Top economist and pandemic advisor
Jan-Egbert Sturm (53) has headed the KOF business cycle research center at ETH Zurich since 2005. The word of the native Dutchman carries weight: in 2021 he reached third place in the “NZZ” economist ranking. As Vice President of the Swiss Corona Task Force, Sturm advised the Federal Council during the pandemic. He is married, has two children and lives with his family on Lake Constance.
Jan-Egbert Sturm (53) has headed the KOF business cycle research center at ETH Zurich since 2005. The word of the native Dutchman carries weight: in 2021 he reached third place in the “NZZ” economist ranking. As Vice President of the Swiss Corona Task Force, Sturm advised the Federal Council during the pandemic. He is married, has two children and lives with his family on Lake Constance.
And otherwise?
In the construction sector we have seen for a number of years that, according to the official figures, things are not going well. But if you talk to the companies themselves, the mood isn’t all that negative. But then you have to see what kind of reaction the turnaround in interest rates will bring with it delays in this sector. Some caution is required there.
Speaking of interest rates – how much more will the National Bank raise interest rates?
In our most recent forecast, we assume that the SNB will raise the key interest rate to a level of 1.5 percent.
House prices are rising much more slowly than in the past. Is a real estate crisis imminent?
There has been some risk of a downturn in the real estate market for a number of years. But I don’t expect that to happen right now. Immigration continues to provide positive impetus for the real estate market. In addition, the public pots for financing infrastructure construction are well stocked. There are some construction projects already planned in this area.
Consumption is an important pillar of the economy. Are consumers in a buying mood?
Consumer sentiment in Switzerland is at an all-time low. But that is only surprising at first glance. The mood is very strongly influenced by the problems we see around us. Every day we read about the war in Ukraine, see the political tensions between the US, Europe and China, fear the energy crisis. All of this is reflected in consumer sentiment. Fortunately, however, consumer behavior is not in line with their mood.
For what reason?
The labor market situation will remain good, income development is normalizing, the savings rate is still higher than before the pandemic. The bottom line is that there is no sign of restraint in consumption. Consumption remains the stabilizing factor in the Swiss economy. The export economy suffers more, the domestic economy remains robust.
But life gets even more expensive?
We underestimated the overall phenomenon of inflation because we had no idea that there was a war. The war in Ukraine has pushed up energy prices, especially gas prices in Europe. Without this war we would not have seen this increase in prices. Because of base effects, energy prices will now disappear from the inflation rate. But it’s not just energy prices that have gone up, inflation has spread throughout the economy.
With what consequences?
There are these so-called second-round effects, which are now reflected in the inflation rate. Many companies respond to our surveys that they intend to raise prices in the near future. There are two opposing movements, the base effects disappear, the second round effects increase. But the bottom line is that the inflation rate will fall.