Bloomberg News

Switzerland’s Economy Unexpectedly Grew in Fourth Quarter

March 01, 2012

Switzerland’s economy unexpectedly expanded in the fourth quarter while growth will remain fragile over the next months.

Gross domestic product climbed 0.1 percent from the third quarter, when it increased a revised 0.3 percent, the State Secretariat for Economic Affairs in Bern said today. Economists forecast a contraction of 0.1 percent, the median of 20 estimates in a Bloomberg News survey showed. Exports of goods and services rose 1.2 percent from the third quarter and private households’ consumption advanced 0.4 percent.

Switzerland’s export-led economy is expected to remain fragile this year as the strong franc and subdued demand from the debt-laden euro area hinder foreign sales. Swiss central bank Vice President Thomas Jordan said last month that “the situation remains very challenging” and projected that the economy would grow “only weakly over the next few quarters.”

“The franc’s strength and its impact on employment and capital spending will continue to damp the economy,” said Alexander Koch, an economist at UniCredit Group in Munich. “We will see a further slowdown before the economy starts to turn the corner in the spring.”

Capital spending including construction increased 2.5 percent, according to the statement. Still, the data show a decline in inventories. “The value added in the manufacturing sector declined,” the government said.

In the full year 2011, Swiss gross domestic product expanded 1.9 percent when adjusted for inflation, the government said.

Weakness Persists

Recent economic data add to signs the economy won’t strengthen soon. The KOF leading economic indicator this week remained near the lowest in more than two years and manufacturing output contracted for a sixth month in February, today’s data show.

Swiss dental-implant maker Nobel Biocare Holding AG (NOBN) last month said it is cautious about 2012 after fourth-quarter profit missed analysts’ estimates on lower sales from Europe and Japan.

The Swiss National Bank imposed a limit of 1.20 francs per euro in September after the Swiss currency reached record levels, undermining exporters’ margins and raising the risk of deflation.

The central bank, which lowered its benchmark rate to almost zero in August to weaken the franc, will hold its next monetary policy assessment on March 15 and is expected to leave the rate unchanged.

To contact the reporter on this story: Klaus Wille in Zurich at kwille@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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