Swiss Growth Outlook Strong

Switzerland’s economy is forecast to expand as previously estimated this year as strong global economy and favorable exchange rate developments boost demand for domestic products.

According to the State Secretariat for Economic Affairs, gross domestic product will grow 2.4% this year, in line with the estimate published in March. Likewise, the projection for 2019 was retained at 2%, RTTNews reported.

The agency said the weaker Swiss franc exchange rate contributed to export growth. Cyclical and exchange rate-sensitive exports such as machinery and metals or tourism services, should therefore develop robustly.

During the second half of the forecast period 2018/2019, the course of the global economy is expected to gradually return to normal after a period of strong growth, the expert group of the federal government noted.

An additional decline in the unemployment rate to an annual average of 2.5% is expected for 2019 compared to 2.6% in 2018.

Nonetheless, inflation outlook for this year was lifted to 1% from 0.6%. In 2019, inflation is forecast to average 0.8% instead of 0.7% estimated in March.

The recovery of the Swiss domestic market is particularly important, with the government warning of weakening impetus from international trade. The government said global economic risks had increased in recent months, an important consideration for Switzerland where exports generate roughly two-thirds of GDP.

Risks highlighted included the trade dispute launched by the US over steel and aluminum imports.

“If the situation were to deteriorate further and trigger a trade war between the major economic areas, this would significantly curb global trade, Swiss exports and, ultimately, economic growth in the medium term,” the government said.