Return to growth
Rising interest rates and galloping inflation have thoroughly unsettled consumers over the last year. This threatening combination also sometimes caused the economy to slow down. In Switzerland the growth in gross domestic product (GDP) halved to 2.1% in 2022, while in the USA the rate of expansion fell to the Swiss level after reaching almost 6% the previous year. Following a weak first six months, however, the graph started to head up again, and the upturn is gaining strength this year too. Although the overseas economy grew by only 1.1% at the start of 2023, the second quarter saw an annualised growth rate of 2.4%, exceeding the average expectations of economists. The domestic economy has put in a strong start to the year, causing the Swiss State Secretariat for Economic Affairs (SECO) to confirm its growth target of 1.1% for 2023 and forecast an acceleration to 1.5% in 2024.
Inflation on the retreat
The positive growth figures go hand in hand with an all-clear on the inflation front. The rate of increase in the price of goods and services in the US fell in June to its lowest level in more than two years. Consumer prices climbed by only 3.0% compared with the previous year, the smallest rise since March 2021. In Switzerland prices are actually falling again, the national consumer price index slipping 0.1% in July compared with the previous month. The Federal Office for Statistics calculated year-on-year inflation at 1.6%. In the eurozone, too, the graph is pointing downwards: last month inflation decreased to 5.3%, having reached 10.6% at its peak in October 2022. Furthermore, according to provisional estimates the economy in the currency zone as a whole also grew at a faster than expected 0.3% in the second quarter.
Tourism as an economic factor
Although Germany, Europe's largest economy, is still showing signs of weakness, southern European states especially are returning to growth. One of the reasons for this is tourism. According to UNWTO data, for instance, southern Europe rebounded to its pre-pandemic level at the start of the year. It is not only the old continent that is seeing greater bookings, though: the itch to travel is increasing across the world. Last year a little over 960 million tourists travelled abroad, which means that two-thirds of the pre-coronavirus figure has already been regained. Overall, international arrivals in the first quarter of 2023 came to 80% of the level before the outbreak of the virus. At 235 million, the number of tourists was more than twice as high as in the same period of 2022. “The start of the year has shown again tourism's unique ability to bounce back,” stated UNWTO Secretary-General Zurab Pololikashvili, adding: “In many places, we are close to or even above pre-pandemic levels of arrivals.” Receipts from international tourism grew back to hit the USDtn 1 mark in 2022, with Europe accounting for the largest share at nearly USDbn 550.
Bullish share prices
Many sectors are profiting from the recovery in tourism, including airlines, aircraft manufacturers, hotels and even the entertainment and cruise industry. Share prices in the last of these sectors have metaphorically gone through the roof this year. Cruise ship giants Royal Caribbean and Carnival, for instance, have posted three-figure percentage gains since the turn of the year. Shares in aircraft manufacturers Airbus and Boeing, though, have also appreciated markedly so far in 2023 thanks to flourishing business. In the first half of the year, for example, Boeing took in orders for a good 1,000 aircraft, almost four times as many as in the same period the previous year. The two rivals also managed to beat expectations with their sales and earnings figures for the second quarter. Another positive development is that Boeing CEO Dave Calhoun is looking to ramp up production of its bestselling 737 MAX to 38 machines a month, 7 more than previously, in light of the global recovery in aviation traffic.