Switzerland’s economy grew by a stronger-than-expected 0.5% in Q4, the government said on Thursday.

The country’s pharmaceuticals sector helped offset weaknesses in other areas of the export-driven economy.

This quarterly growth, adjusted for sporting activities, marked an improvement from the 0.2% growth in Q3 and exceeded the 0.2% forecast in a Reuters poll.

Switzerland hosts several major international sports organisations, such as FIFA, football’s global governing body, and their activities and value-added contribute to the country's GDP.

The chemicals and pharmaceuticals sector saw a 2.7% increase in output, which helped boost exports, according to the State Secretariat for Economic Affairs (SECO), which compiled the data.

“In the other industrial sectors, value added essentially stagnated,” SECO stated.

Despite a strong finish to the year, Switzerland's economic performance was hindered by a sluggish start to 2024, bringing its annual growth down to 0.9%, according to SECO.

This marks a decline from the 1.2% growth rate in 2023 and is half of the country’s long-term average growth rate of 1.8%, Reuters reports.

The typically robust Swiss economy faced challenges last year, struggling with weaker demand from key markets, particularly in Germany and China.

On Wednesday, Swissmechanic, the association representing small and mid-sized manufacturers, reported that tough conditions persist, with nearly 60% of companies experiencing a decline in new orders.

“The mood in industry is quite negative at the moment – the crisis has been going on since April 2023 and many companies don't see signs of an improvement,” according to Swissmechanic President Nicola Tettamanti.

“They are struggling because their main markets in Germany and China are down, there is overcapacity among customers and areas like the automotive sector have gone into complete shock in Europe,” Tettamanti said, going on to add that firms were reducing investments and hiring.