No. 118, May

The global economy is buzzing. Nevertheless, according to the institutes involved in the Joint Economic Forecast for Germany, which also include KOF, growth may slow down in the coming year. The German economy is set to continue its boom phase.

The debt ratio in the non-financial private sector of the Eurozone has stabilised since its peak in 2009 and has recently even declined. In contrast to the strong economic performance before the crisis years, the current upswing is therefore not driven by debt. However, in historic comparison, the debt level is still high and the trends in the various countries are heterogeneous.

“Without innovation, there is no business cycle movement” is a famous statement made by Joseph Schumpeter. In a new paper based on Swiss data, Andrin Spescha and Martin Wörter confirm this claim that there is a relationship between innovation and business cycle movements.

In Switzerland, unemployment begins to decline when GDP growth reaches around 2%. However, the correlation between unemployment and GDP is less pronounced in Switzerland than in other countries. Among the main reasons is the fact that Swiss companies frequently hire foreign employees to meet their staff requirements.