Swiss GDP rose 0.7% from Q1


Swiss economic growth maintained its momentum in the three months through June as companies invested in equipment to meet increased demand at home and abroad.

Gross domestic product, rose 0.7 percent from the first quarter when it grew at the same pace, the State Secretariat for Economic Affairs said on September 4 in Bern. That matched the median forecast in a survey of 20 economists by Bloomberg News. From a year earlier, GDP expanded 2.8 percent when adjusted for price changes.

The Swiss economy, Europe's eighth largest, expanded by 3.2 percent in 2006, the fastest pace since the turn of the decade as global growth and a drop in the franc boosted Swiss exports. The central bank has said the outlook for growth is less certain after financial market turmoil linked to defaults in U.S. mortgages. Swiss manufacturing growth unexpectedly accelerated in August.

"We have a very strong economy based on domestic demand and equipment investment is very high,'' said Janwillem Acket, chief economist at Julius Baer Holding AG. ``There is very strong demand for Swiss exports. This is going to increase the medium and long- term inflation risk.''

Investment in machinery rose 7.6 percent from the first quarter, the largest quarterly increase since the three months ending in March 1998, today's release showed.

"Foreign and domestic demand is increasing capacity constraints, which is now leading to investment in equipment,'' Acket said.

Exports gained 0.5 percent as a 3.1 percent gain in service exports including tourism and banking offset a 0.5 percent decline in Swiss goods sold abroad.

Zurich Financial Services AG, Switzerland's largest insurer, aims to have 1,000 distribution agents in China by 2009, the company said today. Swiss Life Holding Chief Executive Officer Rolf Doering said today that his company is doing well abroad. ``In our international markets, operations continue to develop successfully.''

Imports rose 0.9 percent, while household consumption rose 0.5 percent. Investment in construction fell 3.7 percent.

"Private consumption is very robust,'' said Patrick Muhl, a senior economist at Credit Suisse in Zurich. "It's somewhat surprising that imports didn't increase more.''

Swiss seasonally adjusted unemployment fell to 2.7 percent in July, the lowest in almost five years, encouraging spending by households whose consumption accounts for the biggest part of the economy. New car sales surged 16 percent in July, according to Switzerland's association of car importers.


Bloomberg
9/5/2007 6:30:59 AM