RTTNews - The Swiss economy contracted less than expected in the second quarter as investment rebounded and the pace of decline in exports eased, official data showed Tuesday.

Gross domestic product or GDP fell 0.3% sequentially in the second quarter, the State Secretariat for Economic Affairs or SECO said. Economists had forecast GDP to fall 1% in the second quarter after a revised decline of 0.9% in the first quarter. GDP fell for the fourth straight quarter.

The fall in GDP in the second quarter was curbed by a recovery in capital formation, which grew 1.1% after a fall of 1.5% in the first three-month period. This was due to strong growth in construction, rising from 0% to 3.5%.

Final consumption expenditure continued to develop positively, rising by 0.6%. According to the SECO, growth was recorded in expenditure on housing and energy, furniture, health and telecommunications. However, the categories of food and beverages, clothing and shoes, as well as transport showed a fall. Final consumption expenditure by general government increased 1.2%.

Following two quarters of unusually sharp falls, the downward trend in exports of goods slowed somewhat. Exports of goods and services fell 2.7% after a sharp decline of 6.4% in the previous quarter.

But, the pace of decline in imports of goods and services accelerated to 4.9% from 1.3% as domestic demand fell 1.1% in the second quarter following an increase of 2.2% in the first quarter.

Compared with the same quarter of the previous year, there was a fall in real GDP of 2%, slower than a revised 2.2% decline in the first three months of the year.

The GDP deflator rose by a moderate 0.3% compared with the second quarter of the previous year. The final consumption deflator fell 0.2%. Prices for fixed assets and software almost stagnated while construction prices fell following a lengthy period of continuous growth. In the foreign trade sector, export prices fell 1.3% and those of imported goods and services dropped 6.5%.

The Swiss economic think tank KOF recently said the GDP contraction is likely to draw to a close at the beginning of 2010. As a consequence, the economic recovery could prove to be slightly faster and stronger than had originally been assumed.

The Swiss National Bank forecasts GDP to fall between 2.5% and 3% in this year.

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