ZURICH (Reuters) - Rising output from Switzerland’s flagship pharmaceuticals industry and production of hydroelectric power helped the Swiss economy grow faster than the neighbouring euro zone in the third quarter, masking a slowdown in other parts of the economy.
Swiss GDP increased by 0.4% from the second quarter, the State Secretariat for Economic Affairs (SECO) said on Thursday, accelerating from a 0.3% rise in the second quarter and ahead of the 0.2% level in Refinitiv estimates.
The improvement was led by a 1.2% increase in manufacturing, where the chemicals and drugs sector saw a significant increase in value added and exports, SECO said.
Although the pharmaceuticals sector reported low single digit growth in the quarter, there was a slight decline in traditional manufacturing, SECO said.
Switzerland’s traditional metals and electrical manufacturing base has struggled, with industry association SwissMEM reporting falling orders for five consecutive quarters.
The underlying economic development in Switzerland was still being influenced by global trade tensions and the slowdown in many large markets, said government economist Ronald Indergand.
“The rest of the economy is experiencing a slowdown and without pharmaceuticals and energy, overall growth would have been close to zero,” said Indergand.
“Over the past two months we haven’t seen a further deterioration in the forward-looking indicators, and it looks like the economic cycle may be bottoming out,” he said.
Another contributor to Swiss growth was the country’s energy sector, which grew by 8.2% in the third quarter.
Warm weather increased the melting in the Swiss Alps, boosting the output and exports from water power stations.
Overall, the increase in Swiss gross domestic product was double the 0.2% rate seen in the euro zone, Switzerland’s biggest export market.
Year-on-year, the Swiss economy grew by 1.1% during the third quarter, up from the 0.2% rate in the second quarter and ahead of the 0.8% forecast.
Data collected so far suggested the Swiss economy would grow below its long-term quarterly average rate of around 0.45% during the fourth quarter, Indergand said.
For 2019 as a whole, he expects a GDP figure close to 0.8% accelerating to around 1.7% in 2020.
“We see a moderate recovery over the coming quarters, provided the risks don’t materialise,” Indergand said.
Reporting by John Revill; Editing by Catherine Evans