Swiss GDP Contracted in First Quarter as Franc Stymies Exports

29 May 2015 | Author: | No comments yet »

Swiss Economy Unexpectedly Shrinks After Strong Franc Stifles Exports.

Gross domestic product fell 0.2 percent in the first quarter, after a revised growth of 0.5 percent in the previous three months, the State Secretariat for Economic Affairs in Bern said in a statement on Friday. Meanwhile, Switzerland’s leading indicator for May rose more than expected, so while an economic recovery could not be expected immediately, the likelihood of one in about six months had increased, the KOF Swiss Economic Institute said on Friday. The data also hands ammunition the central bank’s critics, who say its January decision to give up the cap versus the euro is jeopardizing the economy. The removal of the 1.20 francs per euro cap on Jan. 15 sent the Swiss currency soaring, creating problems for exporters – the engine of the Swiss economy. SNB President Thomas Jordan predicts the economy will grow “just under” 1 percent in 2015, half what was forecast when the cap of 1.20 per euro on the franc was still in place.

But Ipek Ozkardeskaya, an analyst at London Capital Group, said she expected the economy to recover in the second quarter on the ability of high-margin Swiss exporters to weather the franc shock. “The KOF indicator is in line with the optimism that the recovery is certainly under way,” said Ozkardeskaya, adding she expected the economy to be back on track from the third quarter. In fact, SNB Vice President Jean-Pierre Danthine said as recently as last week that there would only be “probably one bad negative quarter.” While Swiss reactions to the SNB’s abandonment of its cap have generally been benign, the prospect of slowing growth and rising joblessness has prompted criticism from members of the Social Democratic party, the second-biggest in parliament, who have called for the establishment of a new minimum exchange rate. The May reading of the KOF economic barometer indicated that “the Swiss economy can be expected to exhibit growth rates clearly below average,” according to a statement Friday. According to the International Monetary Fund, Swiss growth is set to slow this year to 0.75 percent, due to the unfavorable exchange rate, with unemployment set to increase moderately.

Here you can write a commentary on the recording "Swiss GDP Contracted in First Quarter as Franc Stymies Exports".

* Required fields
Our partners
Follow us
Contact us
Our contacts

About this site