Immigration vote weighs on economic forecast

Before the immigration vote on February 9 around 80,000 EU citizens freely settled in Switzerland every year, most coming from Germany but with large numbers also coming from neighbouring Italy and France Keystone

The Swiss economy is expected to grow steadily until the end of next year, but the forecast has been lowered owing to insecurities caused by the February 9 vote to limit EU immigration, the Swiss Economic Institute (KOF) said on Friday.

According to KOF’s latest economic forecast, Swiss gross domestic product will expand by 2% this year and 2.1% in 2015 with a recovery of the global economy boosting exports. This represents a slight reduction of 0.2% on previous forecasts made in December.

The institute said the approval by 50.3% of voters of a popular initiative to curb immigration was likely to increase insecurity until the end of 2015, thereby affecting companies’ investment decisions as well as construction activities in Switzerland.

The authorities are working out new immigration quotas for EU citizens, which will take effect within the next three years.

Growth in the Swiss economy will shift from the domestic economy to exports, KOF declared. Goods exports are expected to grow by 4.5% this year and service exports by 3.8%.  Meanwhile, private consumption will remain robust: 2.2% in 2014 and 1.8% in 2015.

Inflation in 2014 is anticipated to be just under 0.2%, rising slightly to 0.7% in the coming year.

Uncertainties

The International Monetary Fund (IMF) this week made similar predictions about Swiss growth: a 2% increase this year thanks to a rosier outlook in the export sector. But it also warned the recent anti-immigration vote had caused growth “uncertainties”.

At the same time a survey of 111 companies by consultants Deloitte published this week found that a large majority of chief financial officers (CFOs) of Swiss companies were unnerved about the fallout from the vote. They cited concerns for the Swiss business landscape as well as for their own companies.

In all, 88% said they expected negative consequences to befall Switzerland as a result of the February 9 vote. Only 6% expected positive outcomes.