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Swiss GDP growth disappoints at 0.3% in Q1

The Swiss economy picked up pace at the start of the year but quarterly GDP expansion disappointed in the non-eurozone country whose central bank is still bemoaning a strong currency.

Quarter on quarter GDP grew 0.3 per cent in the three months to the end of March, up from 0.2 per cent in the fourth quarter of last year, but below a 0.5 per cent forecast compiled by Bloomberg.

The economy was 1.1 per cent bigger on a year on year measure, also picking up from 0.7 per cent.

Switzerland’s central bank has slashed rates into negative territory in a bid to weaken its currency to stoke growth and inflation. Earlier this week, SNB chief Thomas Jordan said the Swiss franc, which is down 2 per cent against the euro this year, still remained “significantly over-valued”.

Switzerland’s GDP performance compares to a 0.5 per cent expansion in the eurozone in the same period, 0.6 per cent in Germany and 0.2 per cent in the UK.

“The recovery is ongoing in Switzerland even if it could be considered as subdued on an historical basis” said Geoffrey Milne, economist at ING, who expects annual growth to hold steady at 1.3 per cent this year.

“The overvaluation of the Swiss Franc still hampers business investment while subdued job creation keeps wages in check”, added Mr Milne.