Swiss Govt Sees "Well Below Average Growth" Next Year

(RTTNews) - The Swiss economy is set to register well below average growth in 2024 as the weaker momentum in the euro area hurts Swiss exports and higher financing cost curbs investment, the State Secretariat for Economic Affairs, or SECO, said Wednesday. In the economic forecast, the expert group of the SECO said gross domestic product will grow 1.3 percent this year, which was unchanged from the previous outlook. But the government trimmed the outlook for 2024 to 1.1 percent from 1.2 percent. The government expects private consumption to provide some support to growth.

The expert group noted that the subdued momentum in the eurozone is likely to hold back the exposed areas of the Swiss export industry. Moreover, declining capacity utilization and higher financing costs are expected to curb investment activity.

As the global economy gradually recovers from the lull of the prior two years, the SECO said growth would return to normal in 2025, at 1.7 percent.

Due to the economic slowdown, the average unemployment rate is projected to rise to 2.3 percent in 2024 from 2.0 percent in 2023.

After an annual rate of 2.1 percent this year, inflation would ease to 1.9 percent in 2024. The estimate for 2023 was lowered from 2.2 percent, while the 2024 forecast to was left unchanged.

The report also highlighted several risks to the economic outlook. The escalating geopolitical risks could lead to a sharp rise in oil prices and which in turn would force central banks to tighten their policies.

In addition, existing risks associated with global debt, risks of corrections on the property and financial markets and balance sheet risks at financial institutions could intensify, the SECO observed. Further, developments in Germany and China pose risks for the global economy and for Swiss exports, the agency added.