The Swiss economy should grow by one percent this year, UBS economists say in a forecast issued on Thursday hedged by concerns about global uncertainty.

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In its German-language “Outlook Schweiz”  quarterly report, Switzerland’s largest bank sees the country’s Gross Domestic Product, which grew by an estimated one percent in 2012, continuing to outperform its European neighbours.

However, growth is expected to be uneven with some sectors benefiting more than others.

Watches, food and pharmaceutical industries will remain a bright spot, said UBS economist Caesar Lack.

But the retail sector is expected to suffer from falling prices and shrinking margins, among other issues, Lack said.

UBS says unemployment will rise from an average of 2.9 percent in 2012 to 3.2 percent or more.

The bank’s economists see the euro stabilizing in value from between 1.25 and 1.30 francs, higher than the 1.20 level around which it hovered for most of last year over concerns about Eurozone countries such as Greece and Spain.

The report says that the Swiss National Bank is unlikely to raise interest rates because of fears of boosting the franc’s value, and the subsequent impact that would have for Swiss exporters already suffering from the strong currency.

The forecast calls for prices increasing just 0.2 percent, although the risk of inflation is higher in 2014.

The outlook for Swiss economic growth is very much dependent on what happens internationally, the report says.

“Five years after the outbreak of the global financial crisis, the global economy is far from being on a ‘normal’ course,” the bank’s chief economist Daniel Kalt said.

“Uncertainty among consumers and businesses remains high,” Kalt said.

“The world economy is likely to continue to move ahead with the hand brake still attached, but at least it should stay somewhat on track.”