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Expectations for Swiss economy inch above long-term average
[ZURICH] The outlook for Switzerland's economy has turned broadly positive for the first time in a year, with businesses beginning to absorb the shock of January's effective revaluation of the franc, data suggested on Monday.
The leading barometer from the KOF economic institute showed a rise to 100.7 points in August from a revised 100.4 in July, the first month in the past year it has exceeded its long-term 100-point average..
The indicator points to the expected performance of the economy, which data on Friday showed unexpectedly skirted a recession in the second quarter, in three to six months' time, The readings for July, revised up from 99.8, and August represented a "normalisation" of the economic situation after the franc shock, KOF economist David Iselin said.
The franc soared after the Swiss National Bank abruptly ditched the currency's three-and-a-half-year cap of 1.20 against the euro in mid-January.
The following month the KOF index fell six points.
Analysts said the data - along with Friday's quarterly GDP growth reading of 0.2 per cent - suggested companies in Switzerland's export-dependent economy had shown themselves better able to adjust to the strong franc than expected, while consumption has also proven very stable.
At 1032 GMT, the franc traded at 1.0802 francs per euro, up around a third of a per cent.
KOF economists said their outlook for the economy was"slightly optimistic" but tinged with uncertainty.
"We were surprised by the good data, but we think the situation might become a little bit harder," Mr Iselin said, adding that the research institute still expected negative developments from exporters.
Friday's data showed exports and imports both fell, the latter at a near-record rate.
On Saturday, KOF Director Jan-Egbert Sturm told the Tages-Anzeiger paper that the institute expected stronger Swiss GDP growth in the second half compared to the standstill of the first, echoing the sentiments of other economists.
KOF higher research associate Boriss Siliverstovs said the institute saw slightly positive tendencies in the manufacturing and banking sectors balanced by slightly negative ones in construction.
"Our overall interpretation is that we are seeing stabilisation," Mr Siliverstovs said. "...We don't have strong signals in one direction or another."