Swiss economy on the verge of an upswing
Published: Monday, Jun 17th 2024, 11:40
Back to Live Feed
The Swiss economy is likely to gradually improve over the next few months. Two new forecasts came to this conclusion on Monday.
In recent months, the Swiss economy has grown at a slower pace than usual. But that could soon change. "The low point of this weak phase should be behind us," Felicitas Kemeny, Head of the Economic Affairs Division at the State Secretariat for Economic Affairs (Seco), told the news agency AWP on Monday.
The Federal Government's Expert Group has made a slight upward adjustment to its forecast for economic growth in the current year. For 2024, it is now forecasting growth in real gross domestic product (GDP, adjusted for sporting events) of 1.2%, compared to 1.1% in the last estimate from March. The forecast for 2025 remains unchanged at 1.7%.
On the same day, the KOF Swiss Economic Institute at ETH Zurich came up with a very similar forecast. It also expects growth of 1.2 percent for 2024 and even 1.8 percent for 2025. There are signs of a recovery from the second half of 2024, according to the communiqué.
Europe recovers
One reason for the emerging recovery is the development in Europe. According to the KOF forecast, the situation should brighten up in Germany, France and Italy in particular. Rising consumer spending and increased investment activity can be expected there.
As is well known, the recent below-average development in these countries had slowed down the Swiss export economy. Now, however, export momentum is picking up again, according to the KOF. As a result, according to the forecasters, value added in the manufacturing sector should also increase again after the recent weak quarters.
According to the Seco forecast, this will also have consequences for Swiss companies' willingness to invest. Although the group of experts still expects investment in equipment to decline this year, it should pick up again significantly next year.
Calming inflation
The second driver of the gradual recovery is the favorable trend in inflation. Federal economists and the KOF have lowered their inflation forecast for 2024 to 1.4% and 1.3% respectively. And for 2025, they are forecasting inflation of just 1.1 and 1.0 percent.
This lower inflation is likely to lead to real wage growth, which should compensate for the losses of the last two years, wrote the KOF. This usually has an impact on consumption. Seco has therefore also slightly increased its forecasts for growth in private consumption.
Consumption will also be supported by the still robust labor market. Although Seco now expects a slightly higher average unemployment rate of 2.4 percent in 2024 and 2.6 percent in 2025, these are still low figures compared to the long-term average, according to Kemeny.
According to the Seco woman, lower inflation and the resulting fall in interest rates are also helping the construction industry, which has recently shown "remarkable weakness". The federal economists assume that construction investment will accelerate to 1.9% in 2025 after zero growth (+0.1%) in the current year. "The demand for residential construction remains high," says Kemeny.
Reported GDP different
The forecasts for unadjusted Swiss GDP are somewhat different. Here, the Seco and KOF forecasts are 1.6% for 2024 and 1.3% and 1.4% respectively for 2025. However, these figures are distorted by major sporting events such as the Olympic Games and the European Football Championships.
This is due to the license payments to the international sports federations based in Switzerland, which, however, do not provide any information on the economic trend.
©Keystone/SDA
English 
German 
French 
Spanish 
Arabic