BERN: Switzerland’s economy contracted in the first quarter, data showed, with strong household spending softening what would have been a bigger drop after the central bank allowed the franc CHF= to float freely against the euro.
Gross domestic product (GDP) fell by 0.2 percent quarter on quarter compared to revised growth of 0.5 percent in the previous quarter.Analysts polled by Reuters had forecast a drop of 0.1 percent.
The trade balance in goods and services in particular delivered negative growth contributions,” the State Secretariat for Economic Affairs (SECO) said in a statement.
Friday’s GDP data is the first to cover the period immediately after the Swiss National Bank (SNB) removed its 1.20 per euro cap on the national currency on Jan. 15.
The cap’s removal sent the Swiss franc soaring on foreign exchange markets, creating problems for exporters – the engine of the Swiss economy.
Swiss exports sank in April, with three-quarters of exporters reporting sharply lower revenue, data showed on Thursday.
Orders to Swiss industry, an indicator of future industrial production, fell 5.0 percent in the first quarter.
Switzerland’s government said in April it did not expect the strong franc to trigger an economic crisis and that taking further measures to support the economy would be inappropriate.
