(Bloomberg) -- Swiss economic momentum accelerated more than expected as strong service output offset export problems of manufacturers.
Gross domestic product adjusted for sports events in the second quarter increased 0.5% from the previous three months, the State Secretariat for Economic Affairs said on Thursday in a flash reading. That’s up from 0.3% in the prior period and beats the median 0.4% estimate in a Bloomberg survey.
The strong franc has been weighing on parts of Switzerland’s robust economy as it makes manufacturers’ exports more expensive. A push for safe havens last week exacerbated the currency’s strength, prompting the industry lobby call on the Swiss National Bank to contain the surge.
Still, Zuercher Kantonalbank’s chief economist for Switzerland, David Marmet, has highlighted that the franc is gradually becoming less important for Swiss growth as more and more of the country’s exports come from the pharma sector, which isn’t as sensitive to prices.
Despite a likely further appreciation of the currency, Marmet therefore expects solid growth for the year. Similarly, the SNB sees output expanding about 1% in 2024.
What Bloomberg Economics Says...
“With the economy operating broadly on trend, with no sign of overheating, and inflation comfortably within the 0% to 2% target range, we expect the SNB will remain focused on limiting upward pressures on the currency. We anticipate it will deliver another rate cut, to 1%, in September.”
—Maeva Cousin, senior economist. For full react, click here
Due to the Paris Olympics and the European soccer cup earlier this year, actual GDP figures are set to be higher than those adjusted for sport events. This is because the championships benefit organizations like the International Olympic Committee or the Union of European Football Associations, which are based in Switzerland.
Final data for the second quarter — including a breakdown on economic drivers — are due Sept. 3.
--With assistance from Mark Evans and Joel Rinneby.
(Updates with Bloomberg Economics comment after fifth paragraph)
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