Azernews.Az

By Bloomberg

Switzerland is paying the price for letting its exchange rate soar.

Three months since ending a cap on the franc, the country is now suffering from its biggest decline in output since the 2008-2009 financial crisis as exports slump, according to a survey of economists.

Swiss gross domestic product contracted 0.1 percent in the first three months of the year and will shrink another 0.2 percent in the current quarter, according to a poll of 12 economists by Bloomberg. That would be the first recession in more than five years.

Economic momentum has taken a hit due to a 17 percent rise in the franc against the euro since Jan. 15, when the Swiss National Bank give up its cap on the currency, hurting exporters such as dental-implant maker Straumann.

“We don’t expect something terrible, but a small recession is reasonable given the shock to the export sector and given that the SNB seems ready to allow an appreciation to continue,” said Julien Manceaux, senior economist at ING in Brussels.

Since lifting the cap, SNB policy makers have repeatedly said they’re prepared to intervene to ensure monetary conditions remain adequate.

The survey of economists was conducted between April 10 and April 16. First-quarter GDP data is due on May 29.