RTTNews - The Swiss economy contracted the most since 1992 as sluggish global demand continued to hurt the country's exports. However, the pace of decline was less than expected.
Data released by the State Secretariat for Economic Affairs or SECO showed that gross domestic product or GDP fell 0.8% sequentially in the first quarter following a downwardly revised 0.6% contraction in the fourth quarter. That was the worst performance since the final quarter of 1992. Meanwhile, economists had forecast the economy to shrink 1.5%. GDP declined for the third straight quarter, while two consecutive quarters of negative GDP defines a recession.
On an annual basis, the real GDP dropped 2.4% in the first three months of 2009. Economists had forecast a 1.7% contraction after a 0.6% fall in the final quarter of 2008.
Compared to the fourth quarter, the pace of decline in exports slowed in the first quarter. Total exports fell 5.4% after an 8.7% contraction in the previous quarter. Exports of goods were down 6.6%, more pronounced than a 2.3% fall in exports of service. At the same time, total imports recorded zero growth in the first quarter.
Households' final consumption expenditure rose 0.1% compared with the previous quarter, reversing a decline of 0.1% in the previous quarter. According to the SECO, a significant rise in spending was observed only in the fields of healthcare and communications. In contrast, spending on clothing, furniture, transport and financial and insurance services declined. Final consumption expenditure by general government rose 1.4%.
The downward momentum in fixed investments was less pronounced in the first quarter than in the two previous quarters. Gross fixes capital formation dropped 0.4% in the first three months after posting a drop of 3.2% in the previous three months.
Moreover, the GDP deflator rose 1.1% compared to the first quarter of 2008. The final consumption deflator stagnated with a growth rate of barely 0.1%. Prices for fixed assets and software rose moderately by 1.1% whereas construction prices rose sharply by 3.5%. In the foreign trade sector, export prices recorded a slight increase of 0.6% and import prices also fell sharply by 4.6%.
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