March 14, 2019 / 7:34 AM / 6 months ago

UPDATE 1-Swiss government cuts 2019 GDP growth forecast again

(Adds comments from SECO, background)

ZURICH, March 14 (Reuters) - The Swiss government has again cut its economic growth forecast for 2019, citing a weaker world economy that is weighing on exports and investment activity.

The State Secretariat for Economic Affairs (SECO) said on Thursday it now saw growth slowing to 1.1 percent this year, compared with the 1.5 percent it forecast in December, when it revised its projection sharply lower.

In 2020, it sees growth recovering to 1.7 percent, in line with its December view.

SECO’s experts expect the domestic and international economy to regain momentum only gradually in 2019.

“In particular, the outlook in other European countries has recently become much gloomier, and growth forecasts for major trade partner Germany have been revised significantly downwards. As a result, international demand for Swiss products is weaker and the export economy is losing momentum,” it said.

It thought the global economy would regain momentum in 2020 provided an international trade war does not escalate. Still, it warned that political uncertainty remained high in Europe.

“In particular, it is unclear whether Brexit will come into force in late March 2019 and what the relationship between the EU and the UK will look like then. Moreover, Italy’s economic and financial situation harbours more substantial risks again, following the country’s slide into recession,” it said.

Swiss-EU ties also remain in flux amid debate over a new treaty that Brussels wants and corporate tax reform.

“Should relations with the EU deteriorate significantly, companies’ investment activity could suffer. In view of simmering imbalances, the risk of a major correction in the Swiss real estate sector also remains,” it said. (Reporting by Thomas Seythal; additional reporting by Michael Shields in Zurich; editing by Riham Alkousaa and Mark Potter)

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