Bloomberg News

Switzerland’s Economy Returned to Growth in Third Quarter

November 29, 2012

Switzerland’s economy returned to growth in the third quarter, expanding to the fastest pace since 2010 as exports soared.

Gross domestic product rose 0.6 percent from the second quarter, when it fell 0.1 percent, the State Secretariat for Economic Affairs in Bern said today. Economists forecast a gain of 0.2 percent, the median of 17 estimates in a Bloomberg News survey showed. From a year earlier, the economy grew 1.4 percent after expanding a revised 0.3 percent in the second quarter.

The Swiss economy is recovering even as the euro area, its biggest trading partner, fell into a recession in the third quarter. The Swiss central bank imposed a franc cap of 1.20 versus the euro in September 2011 to help protect the economy and exporters.

“The development of the third quarter once again confirms the robust state of the Swiss economy,” Alexis Koerber and Boris Zuercher, economists at BakBasel institute in Basel, wrote in a note today. “The potential for positive surprises continues to remain high.”

Exports of goods excluding precious metals, jewelry and antiques gained 2.3 percent after slipping a revised 0.4 percent in the second quarter, today’s report showed. Consumer spending rose 0.1 percent from the second quarter, when it advanced 0.3 percent. Gross fixed capital formation including construction spending fell 0.5 percent after stalling in the previous three months. Domestic demand climbed 0.7 percent in the quarter.

‘High Value’

“The franc at its current level still has a high value,” Swiss National Bank President Thomas Jordan said in Bern yesterday. “This burdens a lot of companies -- especially in a phase of moderate global economic growth.”

The minimum exchange rate has shielded Switzerland from “major damage” and remains the right and necessary measure for the SNB to fulfill its mandate of price stability, he said.

Alexander Koch, an economist at UniCredit SpA (UCG) in Munich, said uncertainty about the economic outlook for the end of this year and 2013 “remains exceptionally high.” Koch said in a note to customers that he expects flat GDP in the fourth quarter after “inflated” third-quarter results and growth of 1 percent for 2012, in line with the SNB forecast.

The franc traded at 1.20392 per euro at 9:30 a.m. in Zurich, little changed from yesterday. It was at 92.78 centimes per dollar, 0.2 percent down from the previous trading day.

The Zurich-based SNB will hold its next assessment on Dec. 13. The central bank’s benchmark interest rate is at zero.

The state secretariat had previously reported that GDP increased 0.5 in the second quarter from a year earlier.

To contact the reporter on this story: Zoe Schneeweiss in Zurich at zschneeweiss@bloomberg.net

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


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