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Switzerland’s economy barely grew in the first quarter as government spending fell for the first time in a year. The slowdown to 0.1 percent followed expansion of 0.4 percent in the last three months of 2015 and fell short of the 0.3 percent growth that economists had forecast.
The report published Wednesday by the State Secretariat for Economic Affairs in Bern also showed that government expenditure dropped 0.8 percent. Private consumption grew 0.7 percent in the first quarter compared with the fourth, the SECO data showed. Exports of goods rose by 2.1 percent. According to the SECO, the contraction in government spending was due to lower employment in the state administration and education sectors.“On the production side, the picture was mixed: whilst financial services and the hotel and catering industry saw a decline, value added in manufacturing, construction and the health-care sector increased,” the SECO said in a statement.
A healthier euro area, where the economy expanded at its fastest pace in a year in the first quarter, is likely to help Switzerland down the road. The 19-country region is its top destination for exports. Yet a slowdown in China, with whom the Swiss have negotiated a trade agreement, could throw a spanner in the works. Swissmem, which represents machine, electrical and metals companies, attributed a small rise in new orders in the first quarter — snapping five periods of declines — to better demand from abroad and called a slight increase in exports to the European Union “striking.”
By Catherine Bosley (Bloomberg)