Switzerland To See Sluggish GDP Growth, Severe Recession Unlikely

The Swiss economy will experience sluggish growth but it will not enter a severe recession next year, and is set to fare better in 2024 on the back of a global recovery, the State Secretariat for Economic Affairs, or SECO forecast Tuesday.

The economy will grow only 1.0 percent next year, instead of 1.1 percent estimated in September. The outlook for 2022 was retained at 2.0 percent.

The winter economic forecasts are based on the assumption that there would be no energy shortages with widespread production losses even after the winter.

Nonetheless, the energy situation is expected to remain tense with higher prices for gas and electricity.

Moreover, subdued global demand will weigh on the Swiss foreign trade over the next two years, the expert group noted.

The SECO has downgraded its inflation projections for this year to 2.9 percent from 3.0 percent and that for 2023 to 2.2 percent from 2.3 percent.

Earlier in September, the central bank had projected inflation for this year at 3.0 percent and that for 2023 at 2.4 percent and 1.7 percent in 2024.

The government today estimated the unemployment rate to rise slightly to 2.3 percent next year from 2.2 percent this year.

For 2024, the expert group of SECO forecasts growth of 1.6 percent, which was slightly below average, with inflation at 1.5 percent. The jobless rate is forecast to climb further, averaging 2.4 percent.

The Swiss National Bank is expected to lift the benchmark rate by 50 bps on Thursday, softening its pace from 75 bps action at the previous quarterly meeting in September. This would mark the third consecutive increase.

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