BUSINESS: Swiss Growth May Quicken, Says President

Berne - Swiss economic growth may accelerate in the second half as a drop in the franc against the euro helps boost exports and households gain confidence in the recovery, President and Economics Minister Joseph Deiss said.

A recovery in Switzerland, Europe's eighth-largest economy, is showing signs of gaining momentum after the worst recession in a decade last year. Demand from the U.S. and Asia has helped boost earnings at companies including Swatch Group AG, the world's biggest watchmaker. Swiss watch exports rose for a sixth consecutive month in July, an industry report showed today.

``We're benefiting from increasing exports and hope that we'll be able to maintain this development for the rest of the year,'' Deiss said. ``The euro seems to be very stable against the franc while there's a certain burden from the weak dollar, which makes it a bit more difficult for export industries.''

Exports, which account for almost half of Swiss gross domestic product, helped drive the economy's 0.4 percent expansion in the first quarter, while consumer spending declined and investment shrank. By comparison, the economy of the dozen nations sharing the euro grew 0.6 percent in that period.

The franc's 4.6 percent drop against the euro since the start of 2003 after three years of gains has added to demand from trading partners by making goods more affordable for countries such as Italy. Versus the dollar, the franc is little changed this year after recovering from a 7 1/2-year high in January.

The franc fell for a second day against the euro, declining to 1.5371 at 9:28 a.m. in Zurich from 1.5362 yesterday. Versus the dollar, the franc advanced to 1.2426 from 1.2436.

``We have actually a positive economic development,'' Deiss said. ``We think that we will have growth of between 1.5 percent and 2 percent this year, which is quite satisfactory.''

Unemployment has held at close to a six-year high of 3.9 percent since November when adjusted for seasonal changes. Accelerating growth in 2005 is expected to show ``an impact'' on the jobless rate, according to Deiss. For 2005, the government sees growth of 2.3 percent.

The government's expert panel on the economy with representatives from ministries and the central bank had its meeting on Aug. 19 in Bern. The revised growth figures will probably be published Aug. 27, while second-quarter gross domestic product is scheduled to be released on Sept. 10.

Copyright: Bloomberg