ZURICH Switzerland's economy grew by 0.3% during the third quarter, the government said on Friday, as the service sector helped offset stagnating manufacturing growth.

The rate - adjusted for sporting events - was up from the flat development in gross domestic product in the previous April to June period, and was better than the 0.1% forecast in a Reuters poll.

Year on year, the Swiss economy grew 0.9%, stronger than the 0.5% forecast.

"The international environment remains challenging, with value added in industry stagnating accordingly," said the State Secretariat for Economic Affairs (SECO), noting however that the service sector was once again able to provide a support.

GDP in the European Union, Switzerland's biggest export market, was flat in the third quarter, Eurostat said last month, while Swiss surveys have shown subdued economic activity.

The Swiss government said in September it expects the country's economy to grow by 1.3% this year, followed by a 1.2% increase in 2024, both slower than the country's long term average growth rate of 1.7%.

It is due to give its latest forecasts on Dec. 13.

(Reporting by John Revill and Tristan Veyet, Editing by Rachel More)