• Swiss real GDP (sa) remained flat in Q3 08 against Q2 08; SNB to cut rates further

In Q3 08, Swiss real GDP stagnated q/q, after rising 0.3% q/q (revised down from 0.4% q/q reported earlier) in Q2 08. The y/y rate was 1.6% y/y after 2.6% y/y (revised down from 2.3% y/y reported earlier). The outcome was in line with the market's and BarCap's estimate of flat q/q growth.

Looking at the breakdown, gross fixed capital spending declined 1.4% q/q, imports fell 0.7% q/q, while all the other GDP components posted positive gains q/q. In terms of q/q contributions to the q/q GDP growth rate, private consumption added 0.2pp, government consumption 0.1pp, while gross capital investment subtracted 0.3pp and changes in stocks 1.0pp; net exports added 1.0pp.

In view of ongoing severe financial market stress, further signs of recession and retreating headline CPI inflation, we expect the SNB to cut rates further. Since October, the SNB has surprised with ad hoc rate cuts. That said, one cannot rule out that the SNB will continue along this path. The next official policy meeting is scheduled for 11 December.

Thorsten Polleit wrote in a Barclays Capital Research report today