The Swiss government on Tuesday cut its growth forecast for 2012 to 0.9 percent, citing a worsening world economic environment and the strength of the franc.

"/> The Swiss government on Tuesday cut its growth forecast for 2012 to 0.9 percent, citing a worsening world economic environment and the strength of the franc.

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FRANC

Swiss cut 2012 growth forecast to 0.9%

The Swiss government on Tuesday cut its growth forecast for 2012 to 0.9 percent, citing a worsening world economic environment and the strength of the franc.

“The federal government’s expert group are … projecting GDP growth in 2012 to be 0.9 percent, after 1.9 percent in 2011,” compared to a previous estimate of 1.5 percent for 2012 and 2.1 percent for 2011, the economy ministry said in a press release.

“An important factor is the unfavourable foreign trade conditions such as the significant slowing of the world economy along with the high valuation of the Swiss franc even after the introduction of a ceiling to the euro exchange rate,” it said.

“The negative impact on exports and company investment could sharply slow economic growth in Switzerland over the short term,” it said.  

The ministry also warned that unemployment in the country may rise “in the coming years,” the first time since 2009.

“Another risk for generating a worse economic outlook, with more recessionary tendencies, might be further upheavals on the financial market resulting from further critical developments in the European debt crisis,” it added.

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ECONOMY

Swiss central bank announces big rate hike in inflation fight

The Swiss National Bank (SNB) raises the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

Swiss central bank announces big rate hike in inflation fight

“The rate change applies from tomorrow, September 23rd 2022”, SNB said in a press release on Thursday.

It added that “inflation [in Switzerland] rose to 3.5 percent in August and is likely to remain at an elevated level for the time being”.

The latest rise in inflation is principally due to higher prices for goods, especially energy and food, according to the bank.

The SNB’s forecast for the evolution of inflation is, however, positive.

It forecasts that the rate will drop to 2.4 percent in 2023 and and 1.7 percent for 2024.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher”, the bank said.

In mid-June, the SNB tightened interest rates by half a percentage point for the first time in 15  years. Since then, inflation in Switzerland has continued to rise. For August 2022, the statisticians reported inflation of 3.5 percent, after 3.4 percent in June and July.

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