Weekly Economic Insights - 18 February 2019

Macro Highlights - 2/20/2019

Highlights of the week

Economist insights: Another shutdown has been avoided in the United States, the effects of China’s stimulus plan continue, and rebound in GDP in Japan

United States

  • The US president signed the final 2019 budget bill, thus avoiding another government shutdown
  • The impact on US GDP growth of the partial shutdown that took place between December 21 and January 25 should remain relatively limited according to our analysis
  • Donald Trump’s declaration of a national emergency at the Mexican border could enable him to re- appropriate federal funds, which were initially allocated to defence notably, to build a wall


  • January data shows that the positive effects of the stimulus plan implemented by the Chinese authorities continue
  • Imports rebounded, and bank credit maintained its positive momentum, while growth in exports accelerated as well
  • These trends are in line with our scenario of a slight acceleration in growth in the first half of 2019


  • Limited rebound in GDP growth in Q4 2018

Focus on Structural Analysis: How do we explain the moderate wage growth in Switzerland and Japan, while unemployment rates are at their lows?

  • The relationship between wage growth and the unemployment rate has weakened in Switzerland and Japan since the financial crisis of 2008
  • In Switzerland, this effect can be explained by the increasing integration of the Swiss labour market into the European market and by the downward wage rigidity during the episodes of a strong Swiss franc
  • In Japan, it stems from the acceleration in the participation of women and seniors in the labour market, as well as prudence on the part of companies in setting salaries
  • According to our analysis, the potential for wage acceleration in 2019 and 2020 remains greater in Japan than in Switzerland
  • However, the factors linked to the weakening of the relationship between wages and unemployment should persist and lead to limited wage pressure in 2019 and 2020 both in Japan and Switzerland


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