Clouds darken Swiss economic horizon

The unemployment rate might rise to 4.5 per cent in 2004 Keystone Archive

The Swiss economy is likely to stay in the doldrums for the foreseeable future, with negative growth and higher unemployment in 2004, according to a new report.

The Centre for Applied Economic Research (Créa) said it did not foresee an upturn until 2005.

The Lausanne-based institute said the unemployment rate would hit 4.5 per cent by the end of 2004, spurred by a stagnant economy.

Unemployment currently stands at 3.7 per cent, or 147,000 jobless.

Switzerland’s gross domestic product (GDP) would shrink in the coming year by 0.3 per cent, but was set to rebound in 2005 to attain a growth rate of 2.4 per cent, Créa said.

The upturn would follow economic recovery in the United States and Asia.

Créa noted that while companies had in recent years shown a willingness to restructure to become more efficient, this in itself was not enough to boost the economy.

Stumbling blocks

In its report, Créa stressed that a number of stumbling blocks to economic growth remained.

These included a lack of competition in domestic markets and an inefficient allocation of capital.

Créa’s prognoses are broadly in line with last week’s warning by the Swiss bank, Credit Suisse, that the economy would stagnate in 2004.

Two other forecasts published last week also painted a bleak picture for the economy.

The economic research group, BAK Basel Economics, predicted negative growth of 0.4 per cent for this year.

Following a projected increase in GDP of 1.3 per cent in 2004, BAK expects to see a rise of 1.8 per cent in 2005.

Switzerland’s biggest bank, UBS, released slightly more optimistic predictions of 1.9 per cent and 2.1 per cent respectively.

swissinfo with agencies

In brief

Créa performs two-year forecasts for the Swiss economy every six months.

This autumn’s forecast predicts that the economy will not grow until 2005.

GDP will shrink by 0.3 per cent in the coming year but grow by 2.4 per cent in 2005.