Export slows swiss economy in Q4

The Swiss economy expanded marginally in the fourth quarter, figures from the State Secretariat for Economic Affairs (SECO) showed Thursday.

Gross domestic product grew by a less-than-expected 0.1% sequentially, the same pace of expansion as seen in the third quarter. Economists had forecast a quarterly growth of 0.4%. The SECO had earlier estimated flat growth for the third quarter.

Switzerland’s export-oriented economy has faced headwinds due to the strength of the franc, which central bank policy makers have repeatedly called “significantly overvalued.” Better growth in the neighboring euro area may help Switzerland, where the manufacturing, retail and tourism sectors have all been negatively affected by the currency. Imports of goods logged a sequential growth of 0.2%, while services import declined 5.2%.
The year-on-year growth more than halved to 0.6% in the fourth quarter from a revised 1.4% in the previous quarter. Economists had forecast the growth rate to remain steady at the third quarter's original figure of 1.3%.
 
In 2016, the economy expanded at a faster pace of 1.3% following a 0.8% rise in 2015. The figures for 2016 thus reflect the economy's modest recovery from the economic slump after the sharp appreciation of the Swiss franc in early 2015, the institute said.
The SECO expects momentum to pick up to 1.8% this year, with a zero rate of inflation. It will provide a new set of forecasts on March 21, just five days after the SNB publishes its own predictions at its quarterly policy assessment.

"This recovery is mainly due to the strong first half of the year 2016 however," the government added.
For this year, Julien Manceaux, an economist at ING Bank, said the domestic demand will recover but that a strong growth acceleration will only take place in 2018, mainly because of the renewed CHF strength. The Swiss National Bank had forecast GDP growth for 2017 to be roughly 1.5%.