Swiss economy sees biggest growth since 2000

On track: the Swiss economy has reached its fastest pace for six years Keystone

The economy in Switzerland expanded by 2.7 per cent in 2006, the fastest rate in six years, according to the State Secretariat for Economic Affairs (Seco).

The news comes a day after the International Monetary Fund (IMF) reported in its annual assessment that as economic expansion entered its fourth year “growth [in Switzerland] is balanced, inflation is low and employment is strong”.

Seco said on Tuesday that the Swiss economy had picked up speed in the fourth quarter of 2006, but at a slower rate than expected, as exports soared but consumption and investment growth slowed.

At 0.5 per cent the robust growth in private consumption also continued in the fourth quarter.

“It was pretty close to the 0.6 per cent we expected,” said Patrick Franke at Commerzbank. “The biggest surprise was the strength of imports, since final domestic demand was not as strong.”

Seco said spending on transport rose sharply, but there had also been also a discernible increase in the fields of healthcare, hotels and restaurants and financial and insurance services. In contrast, spending on clothing, furniture, leisure and culture fell slightly.

In comparison with the same quarter of the previous year, real gross domestic product rose by 2.2 per cent.

Aymo Brunetti, Seco’s head of economic analysis, spoke of a very good year with “healthy development” and pointed to the broad base of the economy’s growth.

Investment

Seco said that on the expenditure side the increase in GDP was primarily due to the positive evolution of private consumption and investments in fixed assets and software.

Total investment expanded by 0.5 per cent compared with the previous quarter. While investment in fixed assets and software recorded a rise in all areas apart from telecommunications, real investment in construction fell by 0.5 per cent due to a slacking off of dynamism in house building.

The expansion in exports of goods and services rose in the fourth quarter to 3.3 per cent, with rises in exports of goods (3.7 per cent) and of services (2.2 per cent).

After two weak quarters imports of goods and services recorded record growth 9.5 per cent, which is largely due to goods imports (10.7 per cent). However there was also a clear increase, of 3.2 per cent, in imports of services.

Seco added that on the production side there were “extremely positive” impulses from added value generated by the financial sector.

“Overall I would say the Swiss economy is doing very well but has come off highs,” said Franke on Tuesday. “We expect the pace of growth to continue in 2007 but with a slight deceleration towards the end of the year.”

swissinfo with agencies

Key facts

Swiss GDP forecasts: 2006, 2007, 2008

Seco: 2.7, 1.7, 1.7
UBS: 2.8, 1.8, 2.0
Credit Suisse: 2.8, 2.2, –
Institute for Business Cycle Research (KOF): 2.6, 2.1,1.5
BAK Basel Economics: 2.9, 2.1,1.7
IMF: 3.0, 2.0, –