Swiss economy shrnks less than expected in Q2

Switzerland's deep recession unexpectedly eased in the second quarter thanks to an increase in private and public spending, while a drop in imports outstripped the decline in exports.

Gross domestic product (GDP) fell by a seasonally-adjusted 0.3 percent in real terms compared with the first quarter, the State Secretariat for Economic Affairs (SECO) said on Tuesday.

Economists had expected a drop of 1.0 percent after a decline of 0.9 percent in the first three months of the year. The most optimistic forecast had been for a 0.4 percent fall. <ECONCH>

"Compared with other major/industrialised economies, however, the Swiss economy is likely to remain relatively soft, and given the complete lack of price pressures that will mean the SNB will continue to be dovish for some time," said Deutsche Bank analyst Henrik Gullberg.

GDP was 2.0 percent lower than a year ago, the SECO said. This was also ahead of the average forecast of a drop of 2.7 percent and even better than the most optimistic forecast for a fall of 2.3 percent.

Switzerland's economy slipped into its worst recession in over three decades in mid-2008 as the global economic slump hit its exporters hard. But the country has held up better than many of its peers thanks to its resilient consumers.

Early indicators such as the KOF growth barometer have been raising hopes of a imminent recovery after main trading partners such as Germany or France moved out of recession in the second quarter.