Swiss pull ahead of eurozone in economic recovery

The OECD says the Swiss economy is picking up Keystone

The Swiss economy is recovering faster than that of the eurozone as a whole, according to a report published on Tuesday.

The Organisation for Economic Cooperation and Development (OECD) also said the economic upturn in Switzerland was likely to continue.

According to data released by the Paris-based OECD, Switzerland’s Gross Domestic Product (GDP) is expected to grow by 1.8 per cent in 2004 and by 2.3 per cent in 2005.

That compares with a growth forecast for 2004 of 1.6 per cent for the eurozone as a whole.

Twelve European Union countries – Germany, France, Italy, Spain, Portugal, Belgium, Luxembourg, the Netherlands, Austria, Finland, Greece and Ireland – are members of the eurozone. Switzerland is not a member of the EU.

“The recovery, which began in the second half of 2003, seems more robust in Switzerland than in the euro area. With the strengthening of the external environment, the upturn is likely to continue,” said the OECD in its latest economic report.

Economic growth

The organisation also predicted that unemployment would gradually fall and called on the Swiss authorities not to jeopardise economic growth by raising interest rates.

“The authorities should maintain easy monetary conditions for some time until the recovery is firmly established.”

The report comes less than a week after latest figures revealed that the unemployment rate in Switzerland had fallen for the third consecutive month.

The number of people out of work in April fell by 0.2 per cent to just over 155,000. The figure was better than analysts had predicted, and has fuelled hopes that the economy is gathering steam.

Call for reform

There was one cautionary note in the OECD report, as the organisation renewed calls on the Swiss government to implement reforms aimed at encouraging more competition on the domestic market.

“The main challenge is to strengthen potential growth and productivity which, first and foremost, requires ambitious reforms in the product markets,” said the OECD.

Three months ago the OECD urged Switzerland to liberalise its markets in an effort to combat “meagre productivity growth”.

It said state intervention in agriculture was pushing food prices far above those of other countries.

The OECD also singled out the electricity, natural gas, telecommunications and postal services as sectors in need of immediate reform.

The organisation maintains that Switzerland needs to become more competitive and boost growth if the country is to maintain a high standard of living.

swissinfo with agencies

In brief

The OECD predicts that Switzerland’s Gross Domestic Product (GDP) will grow by 1.8 per cent in 2004 – a rate faster than in the eurozone as a whole.

The OECD is projecting growth of 2.3 per cent in Switzerland in 2005.

The organisation said the economy would grow even faster if Swiss markets were liberalised to allow more competition.

GDP growth across the 30-nation area tracked by the OECD is expected to average 3.4 per cent in 2004.

The OECD says the world’s richest economies are poised to grow at their fastest rate in four years.