UBS economists lower GDP forecast for 2025
Published: Monday, Oct 7th 2024, 11:40
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UBS economists' assessment of future economic development in Switzerland is worse than it was a month ago. They have lowered their forecast for gross domestic product growth in 2025 to 1.3% from 1.5%. Adjusted for sporting events, they now expect growth of 1.5% (previously 1.7%).
According to a press release issued on Monday, the reason for the subdued optimism is the gloomy outlook for Europe, Switzerland's most important trading partner. The economy in the eurozone is unlikely to accelerate too much, which will delay the recovery in Swiss industry and dampen growth in the local economy, it said. For the current year 2024, UBS continues to expect GDP growth of 1.4 percent, or 1.0 percent on an adjusted basis.
Meanwhile, inflationary pressure in Switzerland is easing faster than expected, the press release continued. According to UBS estimates, inflation is likely to reach 1.1 percent this year and weaken further to 0.7 percent in 2025. The previous estimates were 1.2 and 1.0 percent respectively.
This decline and the increase in population would ensure that consumption in Switzerland would remain stable. Rising health insurance premiums and a higher unemployment rate would at best limit consumption potential.
However, there is still a risk that the recovery in the eurozone will fail completely, according to UBS. This means that the downside risks also outweigh the upside risks for the Swiss economy. Finally, the geopolitical situation remains tense with regard to the Middle East and the risk of massively higher oil prices.
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