Economy expected to grow faster next year

Switzerland's export industry, including the textile sector, is affected by slow economic growth Keystone

Economists have revised downwards their 2005 growth forecasts for Switzerland, but remain optimistic for next year.

The revised forecasts come as the official unemployment rate dropped slightly to 3.9 per cent in March, mainly as a result of seasonal factors.

The Basel Economics (BAK) analysis centre is forecasting a growth rate of 1.4 per cent for the current year, down from a figure of 1.6 per cent published in January.

The more pessimistic forecast was based on a general slowdown of the economy and a drop in export demand from Switzerland’s main trading partners in Europe, said BAK experts on Friday.

They also forecast that the annual unemployment rate would decrease slightly to 3.7 per cent in 2005.

For next year BAK economists are optimistic that growth will pick up, with Gross Domestic Product (GDP) up 1.6 per cent and an unemployment rate of just 3.3 per cent.

On Thursday, the Zurich-based Institute of Business Cycle Research (KOF) also revised its GDP growth forecast for 2005 downwards, from 1.8 per cent to 1.6 per cent.

In line with the BAK forecast, it expects the unemployment rate to stand at 3.7 per cent in the current year.

But KOF experts are upbeat in their forecast for 2006, predicting growth of 2.1 per cent and an unemployment rate of 3.1 per cent.

Unemployment

The Swiss economics ministry published its latest unemployment figures on Thursday, which showed that in March the jobless figure fell 0.2 per cent to 3.9 per cent.

The Swiss labour market – in particular the construction and tourist industries as well as the agricultural sector – benefited from seasonal factors in spring, as had been widely expected.

Officials pointed out a marked decrease in the number of unemployed people aged between 15 and 24.

But trade unions argue that the official figures do not reflect reality because they do not take into account the growing number of people who have dropped out of the statistics.

People not counted in the official tally include those who are no longer eligible for unemployment benefit, as well as those on retraining programmes.

swissinfo with agencies

Key facts

Growth forecast 2005: 1.4-1.6%
Growth forecast 2006: 1.6-2.1%
Unemployment forecast 2005: 3.7%
Official unemployment rate for month of March: 3.9%