ZURICH (Reuters) – The Swiss Federal Council cut its economic growth forecast sharply on Tuesday, citing rising energy and inflation risks.
The State Secretariat for the Economy (Seco) now forecasts an increase in gross domestic product (GDP) limited to 2.0% this year, or 0.6 points less than forecast in June. And for next year, he only expects an expansion of 1.1%, against 1.9% previously.
“The Swiss economy recorded a positive first half of 2022, but the picture has darkened for the future. The tense energy situation and the sharp rise in prices are weighing on the forecasts, especially in Europe”, explains the Seco in a statement.
The Confederation’s expert group has also raised its inflation forecasts: it now expects consumer prices to rise by 3% in 2022 and 2.3% in 2023, compared to 2.5% and 1.4% respectively previously forecast.
Switzerland, less dependent on Russian gas and less exposed to inflation than its big neighbours, Germany in the lead, generally benefits from one of the strongest growths in Europe.
The Seco also specifies that the situation on the labor market should remain favorable with an unemployment rate expected at 2.2% this year and 2.3% next year.
But foreign demand should deteriorate, he adds, a movement which should affect the euro zone as well as the United States and China.
If the Bern experts believe that “there will be no serious shortage of energy” in Europe, they note that the Swiss economy would be “significantly affected” in the opposite case.
They add that the rise in interest rates “increases the risks associated with the sharp increase in indebtedness on a global scale” and that the probability of corrections in the financial markets has increased.
(Report John Revill, French version Marc Angrand, edited by Kate Entringer)
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