Switzerland’s economy powered ahead at the end of last year, building up steam for 2018 and prompting the government to declare an end to the “Frankenshock” that followed the lifting of a currency cap three years ago.
Gross domestic product expanded 0.6% quarter on quarter in the final three months of 2017, official data showed on Thursday, equating to 1.9% year-on-year growth and a 1% rise for the year as a whole, Reuters reported.
Brisk international demand fuelled the export-led economy, while a weaker Swiss franc offered respite for firms squeezed by the currency’s surge after the Swiss National Bank scrapped a policy of limiting its value against the euro in January 2015.
“On a broad economic basis, Switzerland has overcome the franc shock,” said Ronald Indergand, an economist at the economics ministry.“Overall the currency is no longer a drag on the economy at its current level, although there are still a few issues here and there like retailers, which are still having a difficult time.” Retail sales fell 1.4% in January.
The franc’s rapid rise made exports to the eurozone more expensive and threatened the survival of many companies, particularly in the industrial sector. A poll on Thursday showed Swiss manufacturers were now in their most upbeat mood for years.
The improving economy was supported by better growth in Europe, while the domestic sector was also thriving, Indergand said, particularly construction and services.
Growth this year was likely to be well above Switzerland’s average rate of 1.8%, Indergand said.
In December the government forecast growth of 2.3% for 2018. It is due to give its latest assessment on March 20.
