The Swiss economy powered ahead in the second quarter, driven by strong domestic demand, data showed on Tuesday, but interest rates may stay on hold for now as the impact of financial market turmoil is unclear.
Switzerland's real gross domestic product (GDP) rose 0.7 percent compared with the previous three month period, the State Secretariat for Economic Affairs (SECO) said, beating economists' consensus forecast. "The expansion of the Swiss economy continued in the second quarter without losing momentum," the SECO said. Growth in the eurozone, Switzerland's main export market, slowed to 0.3 percent in the second quarter.
On a year-on-year basis, Swiss GDP grew 2.8 percent in the second quarter, before a credit squeeze caused by fears about the consequences of mass defaults on US "subprime" mortgages hit global financial markets in August. This compared with 2.7 percent in the first quarter. The Swiss National Bank forecast economic growth of roughly 2.5 percent for 2007 at its last meeting in June, though the forecast was based on an unrevised 2006 growth figure of 2.7 percent. Revised data showed last week that the Swiss economy grew 3.2 percent last year, the fastest pace in six years.
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