Swiss GDP To Grow Significantly Below Average In 2023: SECO

Switzerland’s economy is projected to grow significantly below its average this year amid the challenging global environment, the State Secretariat for Economic Affairs said in its Spring Forecast.

The expert group of the SECO forecast the alpine economy to grow 1.1 percent this year. That was marginally bigger than the 1.0 percent expansion projected in December.

Although the 1.1 percent is below average, this will not drive the Swiss economy into a recession. The government assumed that there will be no energy shortages with widespread production outages in the coming winter.

Further, the SECO downgraded the outlook for 2024 to 1.5 percent from 1.6 percent.

The government noted that domestic demand continued to strengthen, underpinned in part by a strong growth in employment.

That said, the SECO said the economic slowdown is also likely to have an effect on the labor market, albeit with a lag. The unemployment rate is forecast to fall to 2.0 percent this year before rising to 2.3 percent in 2024.

For 2023, inflation is projected to reach 2.4 percent, revised up from 2.2 percent. At the same time, inflation forecast for next year was maintained at 1.5 percent.

In December, the Swiss National Bank said inflation will be 2.4 percent in 2023 and 1.8 percent in 2024.

The bank had raised its key interest rate over the last three consecutive meetings to counter the rising inflationary pressures. In December, the policy rate was raised by 0.5 percentage points to 1.0 percent.

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