Swiss Growth Cools as Industry Weakness Weighs on Economy
(Bloomberg) — Swiss economic momentum slowed and the country’s biggest steel maker said it will cut hundreds of jobs — a sign that weak foreign demand is taking a toll on the export-focused nation.
Gross domestic product adjusted for sports events increased 0.2% in the third quarter, the State Secretariat for Economic Affairs, or SECO, said Friday. That’s down from 0.5% three months earlier and in line with the median estimate in a Bloomberg survey.
The report came hours after Swiss Steel Group said it would reduce 800 jobs, mostly in Europe, through cuts and changes to weekly working hours. The restructuring follows a slump in demand from key customers — including the German automotive industry. Swiss manufacturers overall saw sales drop in the first half of the year by 5.1%, driven by a 8.4% decline in Germany, according to manufacturing lobby Swissmem.
“Growth in the service sector is offset by a negative performance in industry,” SECO said in a statement that described the outcome as “below average.”
The strong franc — which has been appreciating throughout the second half of the year — has also been weighing on parts of Switzerland’s economy as it makes manufacturers’ exports more expensive. Exports over all industries are expected to stagnate until the first quarter of next year, according to economists at the KOF research center of ETH Zurich.
An exception from the trend has so far been the nation’s large pharmaceutical industry, whose consumers abroad are less price sensitive. This saw it significantly extend its contribution to growth earlier in the year.
The third-quarter GDP figures are a flash estimate, and more details will be published Nov. 29.
Due to the Paris Olympics and the European soccer cup earlier this year, actual GDP figures are set to be higher than those adjusted for sport events. This is because the championships benefit organizations like the International Olympic Committee or the Union of European Football Associations, which are based in Switzerland.
–With assistance from Kristian Siedenburg and Joel Rinneby.
(Updates with job cuts starting in first paragraph)
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