Switzerland's economy grew unexpectedly in the second quarter, skirting a recession as exporters weathered a strong franc better than some had expected. However, economists cautioned that picture was complicated by a fall in imports. This may have flattered the gross domestic product (GDP) calculation but could just mean Swiss manufacturers are ordering fewer components because they are making fewer products.
The economy grew by 0.2 percent from the previous quarter, the State Secretariat for Economic Affairs (SECO) said on Friday, topping the most optimistic forecast in a Reuters poll of 12 analysts. The poll consensus had been for the $690 billion Swiss economy to have shrunk 0.1 percent, which would have marked the first back-to-back quarterly contractions - equating to a recession - in six years.
"The economy is displaying strong resilience in digesting the strong franc appreciation," said Janwillem Acket, chief economist at Julius Baer. The Swiss franc soared in mid-January after the Swiss National Bank removed a cap of 1.20 francs per euro, leading economists and the Swiss National Bank to slash growth forecasts as exports became less competitive.
Economists said solid household consumption and growth in investment indicated strength while the widening second quarter trade surplus, caused by imports falling more than exports, was harder to interpret. Imports dropped by 3.6 percent from the first to the second quarter. "The dive in imports could be a sign that production is sinking," Acket said, pointing to the possibility that manufacturers might have imported fewer supplies. "So that may mean we could have a very challenged situation."
Swiss industrial production was down 2.5 percent year-on-year in the second quarter of 2015, progressively declining during the three months of the quarter to an 11 percent fall in June. A major industrial lobby warned last week that the engineering, electrical and metal industry would continue to fare poorly in the second half of 2015. But Daniel Hartmann, a senior economist at Bantleon, said the group still expected GDP growth of 0.9 percent for 2015 and 1 percent for 2016. "Leading indicators point to a stabilisation in the second half," said Cornelia Luchsinger, an economist at the Zuercher Kantonalbank. The franc edged up to 1.0852 per euro after the data.