2015.03.0303:27:00UTC+00Swiss Economy Expands More Than Forecast In Q4

Switzerland's economy grew more-than-expected in the fourth quarter with momentum underpinned by domestic spending and foreign demand for goods, data from the State Secretariat for Economic Affairs showed Tuesday.

Gross domestic product advanced 0.6 percent from the third quarter, when it rose a revised 0.7 percent. Economists had forecast the growth rate to ease to 0.3 percent.

Private as well as public consumption expenditures delivered positive growth contributions. Household consumption and government spending climbed 0.3 percent and 1.9 percent, respectively.

Investment in equipment gained 1 percent from the prior quarter, continuing the upward trend. On the other hand, investments in construction reported a 1.4 percent fall.

Exports of goods surged 12.6 percent, but excluding valuables, exports were down 0.2 percent. Similarly, imports of goods grew notably by 7.6 percent, while excluding valuables, it fell 1.8 percent largely due to the reduction in chemicals and pharmaceutical imports.

At the same time, exports of services advanced 0.6 percent and imports rose 0.5 percent.

On the production side, manufacturing provided the strongest impetus for the growth. Manufacturing and financial services expanded 1.8 percent each. Property and housing advanced 0.5 percent and the public sector grew 0.8 percent.

The negative contribution to GDP growth came from construction and the transport/warehousing and information/communication sectors. The construction industry contracted 0.5 percent.

On a yearly basis, GDP advanced 1.9 percent in the fourth quarter, the same rate as seen in the third quarter. It was forecast to slow to 1.7 percent.

In the full year of 2014, the economy expanded 2 percent, which was slightly faster than the 1.9 percent growth seen in 2013. This was the fastest growth since 2010.

Nonetheless, the economy is expected to contract this year after the Swiss National Bank abandoned its currency ceiling, prompting the franc to strengthen significantly. The Zurich-based KOF Swiss Economic Institute has forecast the economy to shrink 0.5 percent this year and to see flat growth in 2016.

The SECO is set to publish its economic forecasts on March 19. The agency early this month said it remains difficult to gauge the extent of a possible slowdown in economic activity due to the recent appreciation of the Swiss franc.

In December, the expert group of the SECO assumed growth of 2.1 percent for 2015 and 2.4 percent for 2016.