Weekly Economic Insight - 3 June 2019

Macro Highlights - 6/4/2019

Highlights of the week

Economist insights: Escalation of international trade tensions, Swiss Q1 GDP

International trade

  • Trade tensions intensified in the last few days and fuelled investor concerns over the global growth outlook
  • While the US has lifted the trade tariffs on steel and aluminium for Canada and Mexico, and negotiations on the new North-American trade agreement have made progress...
  • … Donald Trump has threatened Mexico with a hike in tariffs on all its exports to the US if Mexico does not significantly reinforce is immigration controls at the border


  • Quarterly GDP growth was above expectations, at +0.6% in Q1, but y-o-y growth continued to decelerate, at 1.4% after 1.7%
  • According to our forecasts, GDP growth could reach 1.5% in 2019 after 2.5% in 2018, which would contain inflationary pressure and underpin the SNB’s decision to extend its monetary status quo
  • Furthermore, while the Swiss franc appreciated sharply following renewed fears over trade tensions, the SNB could intervene again in the foreign exchange market, according to our analysis

Monthly Chartbook: European elections - diverging implications at the European and national levels

  • Each month, we present the changes in the key indicators of our global macroeconomic scenario, as well as for the US, the eurozone and China
  • This month, we analyse the implications of the European Union parliamentary elections…
  • … the fact that the nationalist vote was not strengthened at the EU level could contribute to reducing the “euro” risk premium, once the uncertainty about the appointment of the new ECB president has dissipated
  • Conversely, at the national level, the nationalist votes in Italy and the UK could exacerbate the wait-and-see attitude of investors, which would affect Italian yields and the pound sterling in particular


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