The Swiss economy is slowing down as the Swiss franc’s growing strength harms exports in the midst of a weakening global economy.
Switzerland’s State Secretariat for Economics reported today that Swiss gross domestic product rose 0.4 percent in the second quarter from the first quarter as was forecast. On a year on year basis, GDP rose by 2.3 percent compared with a year earlier at a revised 2.5 percent, and marginally lower than the expected 2.4 percent expansion.
The Swiss National Bank has recently warned against the franc appreciating too much and in an effort to curb the currency strength it cut already low rates to virtually zero on August 3rd and since then has more than quadrupled the amount of cash it makes available to banks.
The central bank holds its next policy review on September 15.
With global growth slowing down overall, the Swiss economy may struggle to gather strength especially since its major trading partners, Europe is contracting. Data on Wednesday showed that growth in the 17-member euro region, Switzerland’s largest export market, slowed to 0.2 percent in the second quarter, its worst performance since a 2009 recession. Meanwhile Europe’s powerhouse and largest economy, Germany, contracted by 0.1 percent in the second quarter from 1.3 percent in the first as households cut spending.