Swiss economy likely to continue to grow slowly
Published: Wednesday, Dec 13th 2023, 15:00
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The Swiss economy remains with the handbrake on: growth is likely to remain below average in 2024 for the second year in a row.
Three forecasting institutes came to this conclusion on Wednesday. The Federal Government's Expert Group (+1.1%), the Swiss Federal Institute of Technology's Institute of Economic Research (+1.2%) and BAK Economics (+0.8%) expect anything but exhilarating growth rates for 2024.
These are the forecasts for real GDP growth adjusted for sporting events. It is well known that major football events such as the World Cup or European Championships as well as the Olympic Games distort Swiss GDP due to the licensing income of the sports associations based in this country. This is why economists like to use the adjusted figure for multi-year comparisons.
And in this multi-year comparison, the current forecasts for 2024 are "significantly below average", according to the federal economists. Alexis Bill-Körber from BAK Economics added at an event: "We remain below the long-term trend."
Even 2023 was below average: according to the forecasters, growth is currently expected to be between 1.2% and 1.3%. As a reminder, the figure for 2022 was more than twice as high.
No global recession
The main reason for the current dip in growth is the weak development of the global economy. A global recession is not to be expected, according to the federal government's economists. Overall, however, global demand will be weaker than the historical average in the near future. This will not leave the Swiss export industry unscathed.
BAK Economics, for example, estimates global GDP growth of 2.1% in 2024, which - apart from the Covid crisis - is the lowest figure in recent years. The KOF also pointed to the particularly difficult situation with important trading partners, especially Germany.
In addition, BAK Economics stated that the interest rate hikes are only now taking full effect. This is an additional negative factor.
Slightly higher unemployment rate
According to the forecasters, private consumption will continue to provide some support. This is because the employment outlook is still relatively good, even if the average unemployment rate for 2024 is likely to rise to 2.3% from 2.0% in 2023, according to the federal economists. A rate of 2.5 percent is then expected in 2025.
However, growth should improve again in 2025. The federal economists are predicting a figure of 1.7 percent adjusted for sporting events, while the KOF is forecasting 1.8 percent. These figures would no longer be considered below average.
Inflation below 2 percent
Meanwhile, economists are no longer very concerned about inflation. Specifically, inflation is expected to be between 1.7 and 1.9 percent for 2024 as a whole, and then only 1.0 and 1.1 percent in 2025.
Surveys indicate that price pressure is easing, they said. Economists also hope that the abolition of industrial tariffs at the beginning of 2024 will have a positive effect. On the other hand, rising electricity tariffs, the VAT increase and more expensive rents are likely to drive up inflation.
©Keystone/SDA
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