ZURICH (Reuters) - Switzerland’s economy grew by a robust and better-than-expected 0.5 percent in the second quarter, data showed on Tuesday, driven by private consumption and spending on machinery.
The improving economy means the Swiss National Bank is even more unlikely than before to change policy at its next meeting on September 19. Policymakers meet then for an update on the 1.20 per euro cap on the Swiss franc and to set the three-month LIBOR rate.
“There is no reason for the Swiss National Bank to act at the moment. For the SNB, the housing market and their macro-prudential instruments for cooling lending are at the fore,” said Alessandro Bee at J. Safra Sarasin.
Analysts polled by Reuters had forecast quarterly growth of 0.3 percent. First quarter growth of 0.6 percent had also exceeded expectations.
Year-on-year, second quarter gross domestic product rose 2.5 percent, the State Secretariat for Economics said, beating forecasts for 1.7 percent in a Reuters poll. It revised up first quarter annual growth to 1.2 percent from 1.1 percent.
Tuesday’s figures add to a run of recent upbeat economic data.
Private consumption, buoyed by low unemployment, has helped drive Swiss growth even as the debt crisis in the euro zone - Switzerland’s largest trading partner - has sapped demand for exports.
Overseas sales of goods excluding precious metals shrank 0.9 percent in the second quarter, as exports of watches, chemicals and machinery dwindled. Swiss exports also declined in July as appetite for Swiss goods in Europe remained weak.
However, recent data from the euro currency bloc, including business sentiment and private sector growth in Germany, has brightened.
The SNB set a cap on the franc in September 2011, citing the risk of deflation and recession as the strong currency squeezed exporters and the tourism industry.
The Swiss National Bank sees no end to the franc cap at present as current conditions continue to justify its existence, the central bank’s vice chairman Jean-Pierre Danthine said on Monday.
In June, the Swiss National Bank, which holds a policy meeting in two weeks, reaffirmed a forecast for growth of 1 to 1.5 percent this year.
Editing by Jeremy Gaunt