SWITZERLAND’S economy unexpectedly flatlined in the second quarter as trade took a hit from stagnation in its main export market, Europe, and a dip in construction spending.
The data, missing forecasts of a 0.5 per cent increase from the previous quarter, was the weakest reported by the country’s State Secretariat for Economic Affairs (SECO) in two years and suggested forecasts for the rest of the year may need to be cut.
Berne-based SECO is responsible for Switzerland’s national and international economic policy, trade negotiations and labour policy.
As Switzerland is export-orientated, growth prospects are closely tied to the fortunes of the Eurozone, where there is little or no improvement in the economic figures.
“It looks as if in spite of the SNB’s [Swiss National Bank] actions, when Europe sneezes Switzerland catches a cold remains true,” said Swissquote Bank economist Peter Rosenstreich.
The Swiss economy has been supported by the SNB’s nearly three-year-old policy of capping the franc at 1.20 to the euro to stave off the threat of deflation and recession.
Net trade took a toll as exports rose less than imports, while investment in construction fell 0.7 percent quarter-on-quarter and government spending also declined.