Skyeast Investment Corporation

(RTTNews) - Switzerland's economy grew more than expected in the second quarter, boosted by companies' investment.

The economy recorded a 0.9% sequential expansion in the second quarter, a report from the State Secretariat for Economic Affairs, or SECO, showed Thursday. The second quarter growth figure was slightly bigger than the economists' forecast of 0.8%, but down from 1% growth recorded in the first quarter.

Compared to the same quarter in the previous year, real GDP growth was 3.4%, larger than the 2.3% expansion seen in the previous quarter. Economists had expected it to accelerate to 2.6%.

In June, the Swiss National Bank raised its growth estimate for this year to 2%. The KOF economic institute expects growth to ease to 1.6% in 2011 from 1.8% this year.

Recent survey data suggests a slowdown in growth in the Swiss economy. The SVME Purchasing Managers Index for August dropped by 5.5 points to 61.4. The general trend also showed that the industrial recovery has probably peaked.

Final consumption expenditure remained flat on a quarterly basis after rising 0.5% in the previous quarter. Within the overall consumption, general government spending slipped 0.1%. At the same time, gross fixed capital formation moved up 2.1%, reversing a 2.2% fall. Fixed assets and software investment was 2.8% higher and construction investment 1.3% greater than in the first quarter.

Demand for Swiss exports softened over the course of the year. Exports of goods and services rose at a slower pace of 1.7%. Services exports accelerated, up 5.3% compared to the previous quarter, which was merely the result of an extraordinary growth in the trade with raw materials.

On the other hand, growth in import of goods and services more than doubled to 4.6%. The increase in import of goods to a large extent was due to robust jewelry imports. Service imports grew by 6.9%, reversing first quarter's 6.9% drop.

Trade surplus surged to CHF 2.88 billion in July as exports rebounded after plunging in June, according to the Federal Customs Administration. While, imports dipped for a second month in July.

On the production side, SECO today said the fastest growth of value added was observed primarily in the industrial sector. Following a 2% rise in the industrial sector, increase in the value added in the financial services sector was 1.6% and 0.9% in the construction.

Growth was only 0.1% in the areas dominated by public services, while value added in the commerce, hospitality, transport and communications services sectors dipped 0.1% and agriculture by 0.5%.

Retaining its key rate at 0.25% in June, the Swiss National Bank said it will maintain expansionary stance. The next monetary policy meeting is due on September 16.