The Swiss Times - Swiss News in English

Swiss economists expect below-average growth in 2023

  • By The Swiss Times
  • 15 June 2023
While inflation has largely softened this spring, its side effects do remain. The Swiss should not expect to see their economy turn around in the next 12 months, experts say.
Swiss economists expect below-average growth in 2023
Shoppers on Zurich’s Bahnhofstrasse (Keystone SDA).

(Keystone) Federal economists say they continue to expect weak economic development through the end of the year. The State Secretariat for Economic Affairs (SECO) announced on Thursday that the Swiss economy will grow “well below average.”

The federal expert group forecasts real GDP growth of 0.8% for 2023 compared to the previous year. The forecast for 2024 is 1.8%. Excluding the effect of sporting events such as the Olympic Games and major football events, which distort Swiss GDP due to the license income of the sports associations based in this country, 1.1% growth is expected for 2023 and 1.5% for 2024.

All forecasts are unchanged compared to the last predictions from March. The Swiss economy grew substantially in the first quarter, and the global situation also presented itself somewhat more positively. However, current indicators are giving mixed signals. Therefore, a weaker development in the second quarter can be expected.

Swiss economists expect below-average growth in 2023
A waitress takes a one hundred Swiss franc bill out of a her wallet in Zurich (Keystone SDA).
Inflation continues to be a problem child

Federal economists continue to worry about high inflation. This will probably continue to lead to a restrictive monetary policy, which will slow down global demand. In Germany, economists predict inflation of 2.3% for the rest of 2023 after a high of 2.4%. As for 2024, they predict an unchanged value of 1.5%.

The economic slowdown should also make itself felt on the labor market and unemployment should gradually rise. For 2023, an unchanged average unemployment rate of 2% is expected. According to the forecast, 2.3% is expected in 2024.

Swiss economists expect below-average growth in 2023
Customers study the prices of dairy products at their local Migros grocery store (Keystone SDA).
Another energy crisis this winter?

The risks remain, economists say. In particular, inflation could prove even more stubborn and require even more restrictive monetary policy. The risks emanating from the financial system would also be emphasized.

In addition, there are still risks related to the energy supply and energy prices this coming winter. A pronounced energy shortage would also lead to a recession in Switzerland with simultaneous high price pressure.

This article was reprinted with permission from Keystone SDA.

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