BERN. The Swiss economy grew 0.4 per cent in the second quarter, twice the pace of the previous three months, according to the first estimate published by the State Secretariat for Economic Affairs on Wednesday. The expansion was carried by pharmaceuticals, business services and household consumption, and it arrived against a background of a still strong franc and a cooling European cycle.
SECO's figure beat the consensus forecast of 0.2 per cent, which economists had trimmed after weak manufacturing surveys in May. Compared with a year earlier, output was 1.3 per cent higher. The secretariat cautioned, as it always does, that the estimate will be revised when more complete data arrive in September.
Chemicals and pharmaceuticals, which account for more than a third of Swiss goods exports, added the largest single contribution. Production of patented medicines for the American and Asian markets offset a softer quarter in the machinery and metal industries, where order books have been thinning since the spring. Watchmaking was roughly flat, in line with the export figures published earlier this month.
Households spent more, if cautiously. Retail volumes rose 0.3 per cent, and spending on services, including travel and restaurants, recovered after a weak first quarter. The savings rate remains high by European standards, a habit that predates the current uncertainty and that continues to cap how far consumption can carry the expansion.
The franc is the background condition of every boardroom conversation in the country. Against the euro it has eased from its spring highs, a move the National Bank has described as a reflection of interest rate expectations abroad rather than a change in Swiss fundamentals. Exporters have adapted by moving upmarket; not all have succeeded, and the gap between the pharmaceutical corridor around Basel and the traditional machinery regions is widening.
Industry associations welcomed the data and immediately asked for more. Their wish list is familiar: faster permits, relief on energy costs, and a monetary policy that does not treat franc strength as a trophy. The National Bank declined to comment on the specific figures. Its next assessment is due in September, and markets expect it to hold the policy rate at zero.
Cantonal economies diverged along the same lines as their industries. Basel City and Zug outperformed. The Jura and parts of eastern Switzerland lagged. Unemployment, published separately last week, held at 2.4 per cent, a level that continues to constrain hiring even as growth picks up.
Economists cautioned against reading too much into a single quarter. “One quarter is not a trend, but it is no longer a stall,” the chief economist at a Zurich cantonal bank said. The outlook for the rest of the year depends on factors no Swiss government controls: energy prices, global demand and the appetite of the country's largest trading partners.
SECO's own forecast, last updated in June, still puts full year growth at 1.1 per cent, a figure that Wednesday's estimate makes slightly easier to reach. A second estimate, with a breakdown by industry, is due on 26 September.
For now the picture is the one Swiss policymakers prefer: modest expansion, full employment, and a currency that has stopped rising even if it has not fallen far. Whether that combination survives the winter will be the question the September assessment has to answer.