Swiss economic prospects for 2022 dampened but not decimated

Shipping containers being loaded at the Rhine port of Basel, northwestern Switzerland. © Keystone / Christian Beutler

The Swiss economics ministry has downgraded its growth forecast for 2022 due to the war in Ukraine. But it still predicts a solid post-pandemic upswing.

After a couple of years impacted by Covid-19, 2022 should yet see Swiss gross domestic product (GDP) grow by 2.8%, the State Secretariat for Economic Affairs (Seco) said on MondayExternal link in a quarterly assessment – down from the 3% predicted last December.

While the war will have an impact, Swiss economic ties with Russia and Ukraine are relatively limited, Seco said. It did not explicitly mention the sanctions recently placed on Russian businesses and individuals by various western nations, including Switzerland.

The forecast also does not take into account the pessimistic scenario of a “massive shortage of energy or raw materials in Europe”, which would lead to a “significant contraction” of the economies of Switzerland’s main trading partners.

Banks more downbeat

The Seco forecast is also a bit more optimistic than that released today by the biggest Swiss bank UBS, which revised its growth predictions for the year from 2.8% to 2.5%.

Rising energy prices and a stronger Swiss franc will have a negative effect on Swiss trade and exports, the bank said. However, it expects the appreciation of the Swiss currency – often seen as a safe haven in turbulent times – to weaken again throughout the year.

As of March 11, the Swiss franc was worth just under €0.98. Last week, the currencies approached parity, with the franc reaching its highest level against the euro since January 2015.

Seco said the strong currency is also holding back inflation, which it nevertheless expects to rise significantly this year to reach 1.9%. In December, it had predicted inflation of 1.1% for 2022.