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Switzerland Avoided a Recession

Switzerland unexpectedly avoided a recession last quarter as investment and private consumption helped return the economy to growth.

Gross domestic product increased 0.2 percent in the three months through June, after a contraction of 0.2 percent in the previous quarter, the State Secretariat for Economic Affairs in Bern said on Friday. Economists forecast a 0.1 percent contraction, which would have pushed Switzerland into its first recession in six years. The Swiss franc fell against the euro.

Seven months after the Swiss National Bank scrapped its currency ceiling, allowing the franc to float freely again, the economy is grappling with headwinds. With the currency up about 11 percent since the Jan. 15 decision, consumer prices are slumping and exporters say margins are being squeezed.

 “I’m surprised it was positive — it was to be expected that consumption would be a support, it’s more of a surprise that investments were so strong,” said Alessandro Bee, a strategist at Bank J. Safra Sarasin Ltd. in Zurich. “Still, the prospects for Swiss exports have clouded over. The euro is still strong and emerging markets aren’t supportive.”

The franc weakened 0.24 percent to 1.08579 against the euro at 8:37 a.m. in Zurich.

Equipment and software investment increased 1.5 percent in the second quarter compared with the previous three months, the data showed. Exports of goods excluding non-monetary gold, valuables and merchanting rose 0.5 percent, with positive contributions from watchmaking, jewelry and precision instruments as well as the chemical and pharmaceutical industry.