EG: Swiss Economy Grew More than Expected 4Q, Before SNB Scrapped Franc Cap
By Neil MacLucas
ZURICH--Switzerland's economy posted better-than-expected growth in the fourth quarter, the last before a shift in the central bank's policy that sent the Swiss franc soaring.
Fueled by private consumption and government spending, the Alpine nation's economy grew 0.6% in the three months ended Dec. 31, compared with the previous quarter, the State Secretariat for Economic Affairs said. The economy expanded by 1.9% compared with the same quarter a year earlier.
Both measures were above economists' expectations, which were for gains of 0.4% and 1.8%, respectively.
Analysts said the economy is unlikely to continue expanding at that pace in the wake of the Swiss National Bank's decision on Jan. 15 to scrap a policy of capping the strength of the franc. That move, which ended a three-and-a-half-year rule of capping the franc at 1.2 per euro, will make exports to the Switzerland's key European markets more expensive.
"The framework for the Swiss economy has changed massively since the SNB's decision," said BAKBasel senior economist Alexis Bill Koerber. Mr. Koerber said the strong franc will affect developments in 2015 and 2016.
The stronger franc has already hit the country's manufacturing sector, with output dropping for a second consecutive month in February, according to data Monday.
The Swiss KOF leading economic indicator, a forecast of expected economic performance over a six-month period, fell last month by the most since 2011.
Both the BAKBasel and the KOF research institute have cautioned the Swiss economy may experience a "technical recession," or two successive quarters of economic contraction, in 2015.
UBS has warned the strong franc would hit the country's metalworking, machinery and tourism industries.
The economics department, which had projected Swiss GDP to grow 2.1% this year before the SNB decision, will update its GDP, inflation and unemployment forecasts on March 19.
