2019.09.0503:32:00UTC+00Swiss Q2 GDP Growth Slows On Weak Domestic, Foreign Demand

Switzerland's economic growth slowed in the second quarter on weak domestic demand and exports, data from the State Secretariat for Economic Affairs, or SECO, showed on Thursday.

Gross domestic product advanced 0.3 percent sequentially in the second quarter, following a revised 0.4 percent expansion seen in the first quarter. Growth was forecast to slow to 0.2 percent.

On a yearly basis, economic growth eased to 0.2 percent from 1 percent in the first quarter. Economists had forecast an annual growth of 0.9 percent.

Unlike in other European economies, the industrial sector contributed notably to Swiss GDP growth.

Manufacturing output climbed 1.3 percent and construction gained 0.1 percent. Meanwhile, trade shrank 0.3 percent.

The expenditure-side breakdown of GDP revealed a 0.3 percent quarterly rise in private consumption and a 0.1 percent increase in government spending.

The SECO cited 'uncertain environment' as reason for weak investment activity by companies. Investment in construction was down 0.1 percent sequentially and that in equipment logged a decrease of 1.0 percent.

Exports of goods dropped 0.8 percent and imports of goods declined 1.7 percent. At the same time, exports of services slid 0.2 percent, while imports of services advanced 1.5 percent.

Looking ahead, indicators are consistent with the economy staying sluggish at best over the second half of the year, David Oxley, an economist at Capital Economics, said.

The rise in the value of the franc in recent months suggests that the pressure on exporters will only have intensified in the third quarter.

The Swiss National Bank expects the economy to grow by around 1.5 percent in 2019, which is well above the current momentum.