Swiss Economy Grows More Than Expected Defying Factory Downturn

(Bloomberg) — Swiss growth unexpectedly maintained momentum at the end of last year, even as manufacturing continued to weigh on the economy.

Gross domestic product, adjusted for large sports events, rose 0.3% in the fourth quarter, according to data published on Thursday. That expansion, which matches the pace of the previous three month, was stronger than the 0.1% increase predicted in a Bloomberg survey. 

In 2023 as a whole, the economy grew by 1.3%, beating expectations of 0.7%.

“Following a positive previous quarter, value added in manufacturing dipped somewhat, driven by the chemical and pharmaceutical industry falling into negative territory on the back of declining exports,” said the State Secretariat for Economic Affairs, which compiles the data. “The other industrial sectors, however, grew again following two negative quarters.”

The numbers mean that Switzerland, like many of its European peers, saw just one quarter of contraction last year. 

Weak global demand, exacerbated by a strong franc, also weighed on Swiss manufacturing, but problems there are being offset by services, especially the booming tourism sector. Economists predict that GDP will continue to grow in coming quarters.

“Firms have become more confident about their expectations for business trends over the next six months,” Zurich’s KOF economic research center said in its latest economic forecast. “The outlook is more positive than it was before – particularly in manufacturing.”

Further momentum could come from the Swiss National Bank, which is expected to start cutting interest rates later this year, though analysts don’t yet see a move at its next scheduled meeting in March.

–With assistance from Kristian Siedenburg, Joel Rinneby and Harumi Ichikura.

©2024 Bloomberg L.P.