Switzerland emerged relatively early from a recession that had been less deep than in the euro area. The recovery continued in the first half of 2011, although with slowing momentum (Figure 1). Domestic demand has been boosted by investment, notably in construction. Financial services output has recovered, although at a slower pace than in previous expansions. Substantial employment growth has continued to lower unemployment while absorbing a large inflow of foreign workers (Figure 2, Panel A). While the output gap is now small, consumer price inflation remains low, as exchange rate appreciation damped import prices, notably for imported commodities and oil.