Swiss government raises growth forecast – with caveat
The Swiss Federal Government’s Expert Group on Economic Forecasts has raised its economic growth forecast to 1.4% from 0.8% for 2012, reports the State Secretariat for Economic Affairs (SECO).
However, the Expert Group also warns that growth in the country is likely to be under threat well into next year from the surrounding eurozone sovereign debt crisis.
“Preventing an escalation of the sovereign debt crisis in the Euro region is the key prerequisite for a continuation of the positive economic development,” SECO noted.
The basis for the latest forecast is that political and other structures in Europe are successful in stopping an uncontolled spread of the crisis. But even if successful in this, Europe faces a difficult year ahead, according to the Expert Group.
“There is no early end in sight to the recession, particularly for the countries of Southern Europe which are suffering both from falling domestic consumer demand as well as from the tough fiscal policy consolidation measures. Even the robust German economy will be unable to fully escape these difficult conditions un-scathed. It must therefore be assumed that although Germany will remain the engine driving growth in the Euro region, there will be a slowdown in German economic activity.”
Asia and the US look in better shape, according to the outlook, as do emerging markets more generally. Even China’s marginal economic growth slowdown looks positive when viewed from the perspective of avoiding overheading in the property and lending markets.
Switzerland’s domestic economy meanwhile remains “robust”, with investments in construction and household consumption propped up by historically low interest rates.
Even certain exports held up well, despite the ongoing strength of the CHF. In particular “exports of clocks, watches and pharmaceuticals (the two categories together account for more than half of the exports of goods) have to-date performed robustly.”
The Expert Group warns that still successful exporters may not, however, be able to take another challenge. Many cut their sales prices and margins in order to remain competitive, but therefore have little by way of margin to cut further.
That said, employment overall in Switzerland is set to remain high by European standards: the forecast is for an unemployment rate of 3.2% on average throughout 2012, rising slightly to 3.4% in 2013.
To view the full set of forecast figures from the Expert Group published by SECO click here: http://www.news.admin.ch/NSBSubscriber/message/attachments/27139.pdf
Further information is available at http://www.seco.admin.ch/