Swiss economic growth unexpectedly accelerated in the first quarter to the fastest pace in 1 1/2 years, led by consumer demand.
Gross domestic product climbed 0.7 percent from the fourth quarter, when it increased a revised 0.5 percent, the State Secretariat for Economic Affairs in Bern said today. That’s the strongest growth since the third quarter of 2010. Economists had forecast the economy would stall, the median of 18 estimates in a Bloomberg News survey showed.
The economy may struggle to gather strength after the euro region’s fiscal crisis pushed countries from Italy to Spain into recessions, eroding export demand across the 17-member bloc. Swiss National Bank Vice President Jean-Pierre Danthine said today that while the franc ceiling introduced by the central bank in September has decreased “recessionary risks,” policy makers are ready to take further measures if needed.
“It’s certainly a positive surprise and mainly driven by private consumption,” said Reto Huenerwadel, an economist at UBS AG in Zurich. “We don’t see a recession this year, the SNB’s ceiling seems to have a stabilizing effect.”
The franc traded at 1.2011 versus the euro as of 10:21 a.m. in Zurich, little changed from yesterday. It was at 96.80 centimes versus the dollar.
Consumer spending rose 0.6 percent in the first quarter from the previous three months, today’s report showed. Exports of goods and services slipped 0.4 percent, while exports of services advanced 2.6 percent. Government spending increased 2 percent from the fourth quarter and gross fixed capital spending fell 1.5 percent, led by a slump in construction.
The Organization for Economic Cooperation and Development said on May 22 that Switzerland’s economic growth will “pick up from the second half” of 2012. GDP may rise 0.9 percent this year and 1.9 percent in 2013 as consumers step up spending and exports rebound, the Paris-based group said.
SNB President Thomas Jordan said on May 27 that 2012 will be a “difficult year,” adding that policy makers will maintain their franc ceiling of 1.20 versus the euro “for the foreseeable future” to help protect the economy and exporters.
“An appreciation of the Swiss franc would again expose the Swiss economy to considerable risks and, once more, endanger both price stability” and the economy, Danthine said at a conference in Geneva today. “The SNB will continue to enforce the minimum exchange rate with utmost determination and, should the economic outlook and the threat of deflation require, is prepared to take further measures at any time.”
The SNB, which imposed the ceiling on Sept. 6 after the franc surged to a record against the euro, will hold its next monetary assessment on June 14 in Bern.
Peter Rosenstreich, chief foreign-exchange strategist at Swissquote Bank SA in Geneva, said a strengthening economy may “fuel speculation on the sustainability” of the franc cap.
“Baring a significant upheaval in Europe, growth will continue to improve,” he wrote in an e-mailed note today. “This obviously will put pressure on the euro-franc floor as the franc fundamentals provide an attractive investment. We see very little probability that the SNB would risk shifting the minimum exchange rate.”