Economists give less optimistic outlook

Bernd Schips expects an average growth rate for 2006 Keystone

The Swiss Institute for Business Cycle Research (KOF) has revised downwards its growth forecast for next year from 2.1 to 1.5 per cent.

Latest figures for the country’s economy are in line with predictions of banks and research centres.

Experts said the sluggish world economy and high petrol prices were likely to affect the country’s export-oriented business.

KOF said the Swiss economy had so far successfully managed to absorb the high prices for petroleum products, but it warned that the hike could have a knock-on effect.

“Over the course of 2006 exports will temporarily show slower growth, the rise in residential construction should gradually come to a standstill and growth in consumption should recede somewhat,” said a KOF statement.

Bernd Schips, outgoing head of KOF, said there are always risks to forecasts.

“Particularly critical is what happens in the United States,” Schips told swissinfo on Thursday. “If there were to be an abrupt weakening of the dollar we might have to fear a brake on growth and that would have consequences for the rest of the world, including Switzerland.”

The economic think tank at the Federal Institute of Technology in Zurich added that unemployment is expected to rise slightly from the current 3.6 per cent to 3.9 per cent in 2006.

KOF expects growth of 1.7 per cent for 2005, slightly up on its April outlook of 1.6 per cent.

Other forecasts

The latest forecast for 2006 is in line with the State Secretariat for Economic Affairs (Seco) as well as the Basel Economics (BAK) analysis centre.

Earlier this week, the bank Credit Suisse published its latest figures. Its 1.7 per cent growth forecast is at the upper end of the table, while rival bank UBS expects 1.6 per cent.

“Exports will continue to be a driving force of the economy,” said Alois Bischofberger, chief economist at Credit Suisse. “They were very strong in 2004, but growth rates will also be significant this year and next.”

“The main factor behind the momentum is the soaring exports to developing economies – for instance the OPEC [Organization of the Petroleum Exporting Countries] group – that are benefiting from high oil prices and to emerging nations in eastern Europe, as well as to the fast-growing Anglo-Saxon economies,” he told the bank’s emagazine on Tuesday.

swissinfo with agencies

Key facts

Growth forecast 2006:

KOF: 1.5%
BAK: 1.5%
Seco: 1.5%
UBS: 1.6%
Credit Suisse: 1.7%


Growth forecast 2005:

KOF: 1.7%
BAK: 1.2%
Seco: 0.9%
UBS: 1.3%
Credit Suisse: 1.4%