Swiss economic prospects better than expected for 2018

Under construction, but eminently stable: the Swiss National Bank in Bern. © KEYSTONE / ALESSANDRO DELLA VALLE

The latest economic forecast by an expert government group has predicted higher-than-expected growth in 2018 as exchange rates improve and unemployment falls.

The Swiss economy is “booming”, according to the expert group, which released its latest update on Thursday (available here in EnglishExternal link).

Pointing to the rapid rise of GDP in recent quarters and the persistent fall in unemployment numbers, the group revised their prediction for economic growth for 2018 from 2.4% to 2.9%.

With the Swiss franc in a much more “favourable” position compared to the past three years – when it suffered after the shock of the sudden de-pegging from the euro in 2015 – exports continue to provide a big boost to the growth, the press release states.

+ Recovering by weakening: the Swiss franc in 2018

Construction activity, especially commercial construction, is also expected also to grow, and to provide a strong boost to the domestic economy.

Unemployment continues to drop and is expected to finish the year at an annual average of 2.6%, while the inflation rate is set to rise to 1%.

For 2019, the group again expects “robust” growth of 2%, but they flagged some international risks that could cause problems: trade disputes triggered by the US, uncertainty around the political future in Italy, and Brexit-EU relations.

The report comes on the same day that the Swiss National Bank (SNB) announced similar economic forecastsExternal link and pledged to maintain its super-low interest rates (currently -0.75%).

The SNB nevertheless cautioned about a “fragile” foreign exchange market that has seen the Swiss franc “appreciate noticeably” – it has gained 6% against the euro in the past five months.