Swiss Economy Improving Defying Strong Currency

In the 4th quarter of 2012, economy of Switzerland grew contrary to general expectations. The consumer spending increased, thereby helping the economy to battle the headwind of a pretty strong currency. From the 3rd quarter, the Gross Domestic Product increased by 0.2% as announced by the State Secretariat for Economic Affairs. Incidentally, in the 3rd quarter, the GDP increased by 0.6%. On the other hand, Economists forecast stagnation, a separate index for measuring consumer spending jumped up by 1.1%.

In the recent years, the private consumptions have helped Switzerland to grow a lot and even played an important role in helping it to emerge from the financial crisis less bruised than several other European countries. There are some good figures from the manufacturing industry as well for Switzerland, for the first time in last 17 months. Apart from that, for the 5th straight month, the ZEW Index of investor confidence increased for Switzerland.

Alexander Kock, who is an economist of UniCredit SpA, stated that though other industrial countries went downhill as 2012 ended, Switzerland showed signs of positivity. Alexander added that the indicators are looking really good and this momentum should continue over the next few months as well. He commented further that acceleration should be expected over the next 8-12 months.

Investors start buying Swiss Franc when they want safe assets in particular. Incidentally, Swiss France is still 24% higher than what it used to be in September, 2008, the time when the global economic recession began last time.

The Swiss National Bank, incidentally, set a cap of 1.20 per Euro on the Swiss France in September, 2011 for helping the economy. The bank is expecting the GDP of Switzerland to increase by 1.5% in 2013. In 2012, GDP advanced by 1%, faring much better than decline of 1.9% in 2011.

According to the data released on today, the private spending on health care increased. Apart from that, the category including expenditure on financial & insurance services saw higher than average increase as well. The overall spending of Government also went to higher level. In the recent years, the Swiss exporters had a really tough time due to the strong Swiss Franc and the continuing crisis in the Euro area. Incidentally, more than half of the exports of Switzerland are done to Euro area, a region which went to recession in 2012.