Switzerland dodges recession with 0.2% growth

Switzerland's economy expanded by 0.2 percent in the second quarter of this year, the economic affairs ministry said Friday, allowing the country to dodge a recession.

The meagre growth from the first quarter came after the Swiss economy contracted by 0.2 percent during the first three months of the year, which had left many analysts forecasting that the wealthy Alpine nation would slip into recession.

Analysts polled by the AWP financial news agency had expected to see the country's gross domestic product shrink by as much as 0.3 percent compared with the previous quarter.

The Swiss economy meanwhile grew by 1.2 percent compared with the same period a year earlier, again beating analysts' expectations that it would grow by up to 0.9 percent.

The GDP growth can especially be attributed to a steep drop in imports.

The economic affairs ministry SECO said the imports of goods, except for non-monetary gold and valuables, had slumped 3.6 percent during the second quarter, stressing that "such a considerable decline for this category in one quarter is uncommon."

Exports, which slid slightly during the first three months of the year, meanwhile grew slightly during the second quarter.

SECO said exports, excluding non-monetary gold, valuables and merchanting, grew 0.5 percent, boosted especially by swelling exports of watches, jewellery and precision instruments, as well as in the chemical and pharmaceutical industries.

Household consumption meanwhile inched up 0.3 percent during the quarter, while general government consumption grew 0.2 percent, SECO said, helping ensure overall GDP growth.

The numbers came as a positive surprise to many observers who had feared a second quarter with negative growth in an economy hit by the strong Swiss franc, which would have plunged the country into its first recession since 2009.

The Swiss franc soared against the euro in January when the country's central bank suddenly stopped holding down its value artificially, causing massive headaches for the country's exporters.

Swiss GDP growth in the second quarter "surprised on the upside," J. Safra Sarasin analyst Alessandro Bee wrote in a note.

"These GDP figures suggest that the Swiss economy is in a much stronger shape than previously thought," he added, pointing out that the strong Swiss franc's impact on the economy had been less than expected.

"However, we now expect the Swiss economy to take more time to escape the downturn," he warned.