Switerland GDP Unmoved In Q3

Gross domestic product was unchanged in the third quarter after expanding 0.6 percent a quarter ago. The economy was forecast to grow 0.3 percent.

The expenditure side breakdown of GDP showed that consumption contributed very little to growth. While investment underpinned growth, net trade had a negative effect.

Also, consumer spending increased 0.1 percent for the quarter with a decline in spending on housing and energy. There was also a small decline in government spending for the quarter. There was an increase of 0.5 percent in investment spending and there a recovery in construction spending following two successive quarterly declines.

There was a decline in exports of 0.2 percent for the quarter as imports advanced with the trade data having a negative overall impact on GDP. Equipment and software investment as well as construction investment climbed 0.5 percent each.

"The stagnation of Swiss GDP in the third quarter demonstrates the negative impact that deflation and the strong franc have had on the economy", Stephen Brown, an economist at Capital Economics said.

With a plethora of political risks in the Eurozone set to keep the franc strong, exporters are unlikely to get a respite soon, he said. The economist expects Swiss GDP growth to slow from about 1.5% this year to 1% in both 2017 and 2018.

Year-on-year, GDP growth eased to 1.3% from 2% in the second quarter. The annual rate was also weaker than the expected 1.8% expansion.

There was another negative reading for the price deflator with prices declining 0.6% for the quarter, although the rate of decline did slow down and there was an increase in import prices. The data continues to suggest a slight underlying easing of deflationary pressures within the economy.

"Given the overvalued Swiss franc and low demand in Europe, I would say the Swiss economy appears to be in astonishingly good health," Rudolf Minsch at Economiesuisse, an employers' association, said this week.

"What companies have been through is like an extreme fitness programme. Last year was difficult and painful, but it has pushed them towards being more efficient and doing more innovation, which is good for the future."

The domestic economy has also remained relatively robust. But some parts of the economy continue to struggle, particularly manufacturers, who have lost sales and seen their profit margins shrink as the currency rose.

The Swiss National Bank, which has been intervening in the currency markets and imposed negative interest rates to stem demand for the franc, is due to give a policy update on Dec. 15.