Letter from Switzerland

We conclude our current private debt world tour with stops last week in Geneva and Zurich.

As was the case with our previous visits in various overseas capitals, investors shared similar concerns about the world of volatile liquid markets and the relative stability and value in private markets. And as was the case with other geographies, Switzerland has its own unique economic backdrop.

The Swiss economy, while losing steam since early 2022 (see our Chart of the Week), remains in positive territory. Contrast its 0.6% 1Q 2023 GDP with neighboring Germany in a technical recession after its negative 0.3% and negative 0.5% for the previous two quarters, respectively.

This differential may be accounted for in part by national sector strengths. Swiss industries such as financial services, biotech, and specialty manufacturing compare favorably from a cyclical perspective to Germany’s automobiles and chemicals. Add to that the weight of higher German energy costs from its shedding dependence on Russian natural gas.