Experts surveyed by KOF somewhat more pessimistic about the economy
Published: Monday, Mar 25th 2024, 11:00
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Economic experts are slightly less optimistic about the Swiss economy than they were three months ago. They are therefore lowering their growth forecast slightly. However, the experts are somewhat more confident about inflation than recently.
The economists surveyed by KOF are revising their forecasts for Swiss economic output slightly downwards. They now expect gross domestic product (GDP) to grow by 1.1% on average in 2024. In December, the growth forecast was still at 1.2%, whereby this is the forecast adjusted for sporting events. As last December, the unadjusted forecast is +1.4%.
Expectations are significantly lower than before, particularly for investment in equipment. According to the forecasts, this is likely to fall by 0.3% in 2024. In the last survey, a figure of +1.1% was still expected.
The first-time forecast for 2025 is also +1.4 percent (not adjusted for sport) and +1.7 percent (adjusted for sport), as announced by the KOF Swiss Economic Institute on Monday in its quarterly KOF Consensus Forecast.
Milder inflation
The economic experts are also lowering their inflation forecast for the current year once again and now expect consumer prices to rise by an average of 1.4% in 2024 (December: +1.6%).
A figure of +1.2% is then forecast for 2025, which would still be within the range of 0-2% targeted by the SNB. In the long term, the experts expect an inflation rate of 1.0%.
As in December, the average unemployment rate is expected to be 2.2% in 2024 and 2.3% in five years' time.
Falling interest rates expected
The majority of survey participants also expect short and long-term interest rates to fall over the course of the year. The short-term interest rate (SARON) is therefore likely to be 1.57% in three months' time and 1.17% over the next 12 months. The KOF points out here that the latest interest rate cut by the SNB has not yet been taken into account. The 10-year federal bond (spot rate), for example, will yield 0.9 percent in three months and 1.0 percent in one year.
The economic experts surveyed also forecast a slight appreciation of the Swiss franc against the euro and the US dollar. The augurs are also more optimistic about the performance of Swiss equities as measured by the SPI.
12 economists took part in the survey for the KOF Consensus. The survey took place between February 29 and March 20 - i.e. before the SNB's interest rate decision last week.
The KOF Consensus expert survey should not be confused with the KOF Economic Forecast. This will be published on March 26.
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