Gross domestic product dropped 0.8 percent from the fourth quarter, when it declined a revised 0.6 percent, the State Secretariat for Economic Affairs in Bern said today. That’s the worst performance since the second quarter of 1994, according to Bloomberg data. Exports plunged 5.4 percent from the fourth quarter and gross fixed capital spending fell 0.4 percent.
The worst global economic slump since World War II has eroded demand for Swiss exports, forcing companies to slash output and eliminate jobs. Clariant AG, which makes chemicals for the textile and automotive industries, on May 6 reported a 24 percent drop in first-quarter sales. The Swiss central bank has lowered its key interest rate close to zero and purchased foreign currencies to bolster the economy.
Imports were unchanged in the first quarter from the previous three months and consumer spending increased 0.1 percent. Spending on equipment such as machinery increased 0.1 percent and construction investment dropped 1 percent.
From a year earlier, GDP shrank 2.4 percent in the first quarter, more than the 1.7 percent forecast of economists.
The 16-member euro area economy, which buys more than half of Swiss exports, contracted 2.5 percent in the first quarter, the biggest decline since data were first compiled in 1995. In Germany, Europe’s largest economy, GDP shrank by a record.
Swiss unemployment rose to the highest in almost three years in April.
There are some signs of stabilization. Manufacturing shrank at the slowest pace in seven months in May, according to a report today, while investors grew more optimistic.
Still, the SNB expects the economy to shrink as much as 3 percent this year, which would be its biggest contraction since 1975.