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Switzer­land's econ­omy grew un­ex­pect­edly in the sec­ond quar­ter, skirt­ing a re­ces­sion as ex­porters weath­ered a strong franc bet­ter than some had ex­pected. How­ever, econ­o­mists cau­tioned that pic­ture was com­pli­cated by a fall in im­ports.

This may have flat­tered the gross do­mes­tic prod­uct (GDP) cal­cu­la­tion but could just mean Swiss man­u­fac­tur­ers are or­der­ing fewer com­po­nents be­cause they are mak­ing fewer prod­ucts. The econ­omy grew by 0.2 per­cent from the pre­vi­ous quar­ter, the State Sec­re­tar­iat for Eco­nomic Af­fairs (SECO) said on Fri­day, top­ping the most op­ti­mistic forecast in a poll of 12 an­a­lysts. The poll con­sen­sus had been for the $690 bil­lion Swiss econ­omy to have shrunk 0.1 per­cent, which would have marked the first back-to-back quar­terly con­trac­tions - equat­ing to a re­ces­sion - in six years.

"The econ­omy is dis­play­ing strong re­silience in di­gest­ing the strong franc ap­pre­ci­a­tion," said Janwillem Acket, chief economist at Julius Baer. The Swiss franc soared in mid-Jan­uary af­ter the Swiss Na­tional Bank re­moved a cap of 1.20 francs per euro, lead­ing econ­o­mists and the Swiss Na­tional Bank to slash growth fore­casts as ex­ports be­came less com­pet­i­tive.

Econ­o­mists said solid house­hold con­sump­tion and growth in in­vest­ment in­di­cated strength while the widen­ing sec­ond quar­ter trade sur­plus, caused by im­ports fall­ing more than ex­ports, was harder to in­ter­pret. Im­ports dropped by 3.6 per­cent from the first to the sec­ond quar­ter. "The dive in im­ports could be a sign that pro­duc­tion is sink­ing," Acket said, point­ing to the pos­si­bil­ity that man­u­fac­tur­ers might have im­ported fewer sup­plies.

"So that may mean we could have a very chal­lenged sit­u­a­tion." Swiss in­dus­trial pro­duc­tion was down 2.5 per­cent yearon-year in the sec­ond quar­ter of 2015, pro­gres­sively de­clin­ing dur­ing the three months of the quar­ter to an 11 per­cent fall in June. A ma­jor in­dus­trial lobby warned last week that the en­gi­neer­ing, elec­tri­cal and me­tal in­dus­try would con­tinue to fare poorly in the sec­ond half of 2015. But Daniel Hart­mann, a se­nior economist at Bantleon, said the group still ex­pected GDP growth of 0.9 per­cent for 2015 and 1 per­cent for 2016.

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