Swiss Q3 growth dips on strong franc, beats forecast

* Swiss GDP up 0.7 pct q/q, analysts expected 0.5 pct rise

* Exports fell on the quarter, consumption, investment up

* Swiss National Bank seen holding rates low well into 2011

ZURICH, Dec 2 (BestGrowthStock) – Switzerland’s economy slowed
slightly in the third quarter as the strength of the Swiss franc
hit exports, adding to the case for the Swiss central bank to
keep interest rates low despite strong consumer spending.
The State Secretariat for Economic Affairs (SECO) said gross
domestic product rose by 0.7 percent in real terms compared to
the second quarter, slightly more than analysts had expected. It
also revised down growth rates for the two previous quarters.
[ID:nCHGDP]

“Swiss franc strength and the global slowdown in Q3 have
taken their toll on exports,” Nikola Stephan, analyst at Informa
Global Markets, said.

“But together with the downward revision, the Swiss GDP
remains broadly in line with expectations and should thus leave
the SNB on course for at least two more unchanged rate
verdicts.”

The franc has appreciated over the last month against the
euro, trading around 1.3180 per euro on Thursday, within sight
of the all-time high hit at 1.2763 per euro in early September.

Swiss exports of goods fell by 1.2 percent on the quarter
and imports were down 1.0 percent, the SECO said. Consumer
spending rose by 0.3 percent, company investment was 0.9 percent
higher and construction spending increased 0.4 percent.

OVERVALUED

The Swiss National Bank said after its latest policy meeting
in September that the economy faced a “marked” slowdown due to
the strong franc and the cooling of the global economy.

But so far early indicators such as the KOF growth barometer
point only to a moderate easing of the Swiss economy, which the
SNB sees growing by around 2.5 percent in 2010.

The year-on-year growth rate stood at 3.0 percent in the
third quarter, the SECO data showed.

The central bank will provide an update on its growth and
inflation forecasts at its next policy meeting on Dec. 16, where
markets and analysts expect unchanged rates.

“The franc’s strength has already tightened monetary
conditions and therefore the SNB will not raise rates now,”
Sarasin analyst Ursina Kubli said.

“We see a rate hike in the second quarter of 2011,” she
said. “The franc is now overvalued and should weaken once the
concerns over the euro and the global economy ease. This will
provide the SNB with leeway to raise rates.”

Interest futures indicate that markets are pricing in a high
chance for a first interest rate hike only for December
2011.(0#FES:: )

(Reporting by Sven Egenter; editing by Patrick Graham)

Swiss Q3 growth dips on strong franc, beats forecast