Switzerland's economic activity stagnated in the third quarter as the strength in investment was offset by negative net trade, the State Secretariat for Economic Affairs said Friday.
Gross domestic product was unchanged in the third quarter after expanding 0.6 percent a quarter ago. The economy was forecast to grow 0.3 percent.
The expenditure side breakdown of GDP showed that consumption contributed very little to growth. While investment underpinned growth, net trade had a negative effect.
Household spending gained 0.1 percent, while government expenditure dropped 0.1 percent. At the same time, equipment and software investment as well as construction investment climbed 0.5 percent each.
Meanwhile, exports of goods dropped 0.2 percent and that of services slid 0.8 percent. On the other hand, imports of goods rose 0.2 percent and services import remained flat.
Year-on-year, GDP growth eased to 1.3 percent from 2 percent in the second quarter. The annual rate was also weaker than the expected 1.8 percent expansion.
The GDP deflator decreased by 0.6 percent in comparison to the third quarter of 2015.
The stagnation of Swiss GDP in the third quarter demonstrates the negative impact that deflation and the strong franc have had on the economy, Stephen Brown, an economist at Capital Economics said.
With a plethora of political risks in the Eurozone set to keep the franc strong, exporters are unlikely to get a respite soon, he said. The economist expects Swiss GDP growth to slow from about 1.5 percent this year to 1 percent in both 2017 and 2018.
The Swiss National Bank has kept its interest rate negative to ease upward pressure on the currency. The bank forecast economic growth of around 1.5 percent for this year.
by RTT Staff Writer
For comments and feedback: editorial@rttnews.com
Business News
