ZURICH, (Reuters) – The Swiss economy grew 0.4% in Q1 2022 according to government figures. It was driven by strong manufacturing activity following the global pandemic.

If sporting events are not included, the GDP increased 0.5% in this quarter.

As demand for Swiss watches, machinery and jewellery increased, higher inflation and conflicts in Ukraine will not dampen this upturn.

This quarter’s increase was slightly higher than the 0.3% rate of growth in the fourth-quarter 2021, and there are expectations for an additional 0.3%. [S8N2XI0B7]

Switzerland’s economy saw a 4.2% increase in January-March, an improvement on the 3.6% growth in the fourth quarter in 2021.

The recovery was as strong and expected.

“Industrial sector”, said the State Secretariat for Economic Affairs, which compiles the numbers.

“This growth was associated with a higher rate of exports of goods than historical average.

In spite of a slowerdown in the chemical and pharmaceutical sectors, industrial output rose by 1.7%. This was due to strong foreign demand.

SECO reported that exports rose by 1.4% due to higher demand for precision Swiss instruments, jewellery and watches, and machinery and metals.

The department stated that public health measures had less economic impact in the first quarter of the year than the previous waves. These policies were being eased starting February.

The only industry to experience a significant decline was that of hospitality and food services, the report said.

As higher prices decrease the purchasing power of businesses and households, inflation is likely to impact Swiss growth at the end of this year.

The Swiss inflation rose to 2.5% in April as food and energy prices increased.

However, Swiss inflation is still much lower than that of the neighboring European Union at 8.1% and Britain’s at 9%.

Due to higher inflation and conflict in Ukraine, the Swiss government reduced its projection for economic growth to 2.8% this March. They kept their 2023 growth projection of 2%.