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Forecasters see little spark from Swiss economy

Electricity plugs
The Swiss economy will see little spark this year despite a predicted calming of energy prices. © Keystone / Petra Orosz

The Ukraine war and high inflation are still expected to hold back the Swiss economy this year, but energy costs are expected to ease.

The Swiss expert group on business cycles predicted economic output to rise by a meagre 1.1% this year (excluding major sporting events) as inflation stabilises at 2.3% (2.8% in 2022).

The first three months of 2023 saw solid private consumer demand and some industrial growth, the State Secretariat for Economic Affairs (SECO) stated on Thursday.

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“However, current indicators are giving mixed signals, and a general weakening of the Swiss economy is expected in the second quarter.”

Economic growth is tipped to rise by 1.5% in 2024 as the expert group largely stayed with their previous prognosis in March.

The KOF Swiss Economic Institute also released its forecast on Thursday, predicting GDP growth of 1.2% this year and 1.7% in 2024.

+ How the Swiss economy is shaping up for 2023

Both forecasts are significantly more upbeat than the Organisation for Economic Cooperation and Development OECD that predicted growth of 0.6% in Swiss GDP in 2023, and 1.2% in 2024.

While the Swiss authorities expect unemployment rates of 2% in 2023 and 2.3% next year, KOF pointed out that the International Labour Organisation uses different measurements and predicts a 4.2% jobless rate this year and next.

Inflation should fall to 1.5% in Switzerland next year with the Swiss central bank giving signals it will raise interest rates again in the coming months.

“Overall, domestic demand would thus be the main pillar of growth in 2023. Foreign trade, on the other hand, will likely contribute little to GDP growth,” said SECO.

OECD experts said on Wednesday they predicted growth of 0.6% in Swiss GDP in 2023, and 1.2% in 2024.

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