Swiss GDP declines in the first quarter
Switzerland’s economy shrank in the first three months of the year, as currency headwinds hit the country’s pharmaceuticals and machinery products, data released on Friday showed.
Gross domestic product in the first quarter fell 0.2% quarter-on-quarter but climbed 1.1% year-on-year, the Federal Department of Economic Affairs, Education and Research said.
The figures fell short of analysts’ expectations for a 0.1% decline in the quarter and a 1.6% increase in annual terms.
The report showed Swiss goods exports fell 3.8% quarter-on-quarter, as the strength of the Swiss franc hit sales of pharmaceutical and chemical sales particularly hard, while household spending rose 0.5% and investment climbed 0.4%.
Analysts said the contraction was expected after the Swiss National Bank decided to abandon its policy of capping the franc at 1.20 per euro in January and anticipated a weak outlook for the country’s economy.
“Looking ahead, we suspect that the economy will remain weak,” said Jonathan Loynes, chief European economist at Capital Economics.
“Admittedly, low unemployment and strong public finances should ensure that both household and government spending continue to rise.
“But deflation poses a risk to the consumer recovery – CPI inflation has been negative for the best part of four years.”