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Exports help Swiss economy recover in first quarter

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[May 28, 2014]  By Alice Baghdjian

ZURICH (Reuters) - Recovering exports and a mild winter helped Switzerland's economy rebound from a weak fourth quarter, though its performance fell short of expectations as private consumption diminished, government data showed on Wednesday.

The Swiss economy grew 0.5 percent in the first three months of the year compared with the previous quarter, when it posted quarterly growth of 0.2 percent. Economists in a Reuters poll had forecast growth of 0.6 percent.

The health of Switzerland's economy underscores the success of the Swiss National Bank's policy of capping the franc at 1.20 per euro in 2011, when the strong currency provoked falls in prices and squeezed exports and tourism.

Recent data have shown exports are gradually recovering. Sales abroad of vehicles and chemical and pharmaceutical products spurred a 2.2 percent increase in total exports quarter-on-quarter, the State Secretariat for Economic Affairs said.

An increase in sales of chemicals and jewelry was behind a rise in April exports, pointing to a favorable outlook for the Swiss economy.

Investment in construction jumped 2.7 percent during a mild winter. However, private consumption, which has supported Switzerland through periods of weak demand for exports, grew just 0.1 percent in the first quarter compared with 0.7 percent the quarter before.

"Private consumption has slowed, thus limiting the risk of spiral ling consumer prices. In addition, firms remain cautious and are refraining from spending on equipment," Credit Suisse economist Maxime Botteron said. "This trend allows the Swiss National Bank to keep its very accommodative monetary policy in place."

Gross domestic product rose 2.0 percent on an annual basis, beating expectations of 1.9 percent and up from 1.7 percent in the prior quarter, the SECO said.

The Swiss central bank, due to hold its next quarterly policy meeting on June 19, has forecast growth of about 2 percent for the year.

(Editing by Larry King)

[ 2014 Thomson Reuters. All rights reserved.]

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