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Swiss economy expands at fastest pace in almost two years  Join our daily free Newsletter

MENAFN - ecPulse - 29/11/2012

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The Swiss economy expanded unexpectedly in the third quarter at the fastest pace since the fourth quarter of 2010, according to figures released by the State Secretariat for Economic affairs in Berlin on Thursday.

In three months ended September, Gross domestic product rose 0.6 percent, following a 0.1 percent decline in the second quarter. Analysts saw the GDP rising only by 0.2 percent in that period.

Consumer spending rose 0.1 percent in the third quarter, but down from the 0.3 percent growth in the second quarter.

On the Other hand, government spending rebounded by 1.7 percent from a quarter ago. Gross fixed capital formation declined 0.5 percent in third quarter, following a flat figure a quarter ago.

Exports of goods, excluding valuables rose unexpectedly by 0.5 percent, little changed from second quarter gain of 0.4 percent, but still considered as good indicators for the export-driven economy. Imports also jumped 0.8 percent from 0.2 percent a quarter ago.

Annual growth was also surprising actually with the GDP jumping 1.4 percent from a year ago, compared with revised growth rate of 0.3 percent a quarter ago.

In the second quarter, the Swiss economy contracted for the first time in nine months amid escalating uncertainty over the debt crisis in euro zone, Switzerlands biggest market.

Switzerlands economics ministry said GDP fell 0.1 percent in the second quarter in light of euro areas financial crisis and the slowing global activity, as the strong Swiss franc continued to hammer exports.

The Swiss National bank keep the target range for the three-month Libor rate unchanged at 0.00-0.25 percent  and the 1.20 Franc floor intact in a tough bid to counter risks of recession and deflation. The SNB said its prepared to buy unlimited quantities to defend the franc and maintain liquidity in the market.

The Organization for Economic Cooperation and Development (OECD) said Tuesday that Swiss economic growth may slow to 0.8 percent this year, but should picink up to 1.1 percent in the second half of next year.

Switzerland is still facing deflationary headwinds despite the late surge in consumer prices and particularly fuel. Inflation is expected to decline 0.6 percent this year, more than the 0.5 percent decline forecasted in August.

On the bright side, the OECD said "domestic demand, particularly consumption and construction investment, is holding firm" despite the present decline in global activity.

Further measures to salvage the Swiss economy from the impact of its strong currency arent likely ruled out for the coming period considering the growing signs of imbalances on the Swiss mortgage and real estate market.

"Although there are some signs of a loss in momentum, mortgage lending and Swiss house prices continue to increase strongly, and targeted measures to slow credit growth should be envisaged," OECD said.

The SNB has projected moderate growth for the Swiss economy, at close to 1 percent, and so far the Franc cap remains the boldest measure taken by the SNB, but could it be cure-all for the export-led economy?


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