Figures confirm Swiss economic upswing

Exports continue to drive the Swiss economy. Panalpina

The economy grew by 0.5 per cent in the final quarter of 2005, slowing down from 0.9 per cent in the third quarter, but still confirming the economic upturn.

The State Secretariat for Economic Affairs (Seco) said on Thursday that preliminary figures showed the economy grew by 1.9 per cent as a whole during the year.

“The… trend upwards of the Swiss economy is proving to be increasingly anchored,” Seco said in a statement.

It added that the upswing, which started in 2004, had been confirmed and was now more broadly based.

“Growth should continue in 2006, with an increase of GDP of 1.8 per cent,” commented Seco’s Bruno Parnisari.

He said oil prices “almost miraculously” had not had a great impact, with inflation remaining moderate.

Parnisari explained that competition among companies and the globalisation of the economy had resulted in price cuts that had compensated for higher oil prices.

Healthy exports

The economy was boosted by healthy exports. The sale of goods and services abroad rose by 4.5 per cent in 2005, with an increase of 1.2 per cent in the final quarter.

Imports showed the same kind of dynamism, increasing by 5.3 per cent for the years as a whole and by 2.9 per cent for the final quarter.

Economists said the data confirmed the picture of a solid Swiss economy, which was likely to prompt the Swiss National Bank to raise interest rates again in March.

Deutsche Bank economist Klaus Papenbrock said the fourth-quarter figure was largely in line with expectations.

“We had expected a number of 0.7 per cent [quarter on quarter] but one has to note that the second quarter, for instance, was revised upwards and that compared to its neighbouring countries, especially Germany, growth in Switzerland is certainly good.”

Further growth

He added that economic indicators were pointing to “further robust growth” in the first half of the year.

“While there is no need for urgency or aggressive rate steps, the Swiss economy is growing well, above potential, and the SNB should increase rates [in March].

Switzerland’s largest bank, UBS, reported on Tuesday that its consumption indicator rose in January for the third month running, signalling that private consumption was set to support the upturn led so far by exports.

The monthly indicator rose to 1.46 in January from 1.33 in December.

UBS said in a statement that the latest jump had been fuelled by the “marked rise in the consumer sentiment index in the first quarter, coupled with the enhanced business outlook in the retail sector”.

swissinfo with agencies

Key facts

GDP growth estimates for 2005

Switzerland: 1.9%
Germany (Switzerland’s main trading partner): 0.9%
France: 1.9%
Britain: 1.8%
Austria:1.7%
Italy: 0%
European Union: 1.6%
United States: 3.5%

In brief

Switzerland’s manufacturing sector grew at its fastest pace since April 2004 in February, sending signals for strong economic growth in the months ahead.

Data have all been indicating that the upturn is becoming more broad-based.

Swiss consumers have become much more confident this year.

The Swiss National Bank raised interest rates for the first time in 15 months in December.

In the euro zone, home to most of Switzerland’s major trading partners, economic sentiment hit five-year highs in February, following the most upbeat confidence figures in neighbouring Germany in more than 14 years.