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UPDATE 1-Swiss govt cuts economic growth forecasts for 2014, 2015
June 17, 2014 / 8:17 AM / 3 years ago

UPDATE 1-Swiss govt cuts economic growth forecasts for 2014, 2015

* Growth f‘cast for 2014 cut to 2.0 pct (pvs 2.2 pct)

* Growth f‘cast for 2015 cut to 2.6 pct (pvs 2.7 pct)

* Slow recovery of exports holding back growth - govt (Adds detail)

ZURICH, June 17 (Reuters) - The Swiss government cut its economic growth forecasts for this year and next on Tuesday, citing a sluggish outlook for exports as slow growth in the European Union, Switzerland’s main trading partner, dents demand for Swiss goods.

Tentative signs of recovery in Europe have yet to push up demand for Swiss exports, obstructing economic growth in Switzerland.

“The economic picture is still split, with a good domestic economic trend on the one hand and muted exports on the other,” economists at the State Secretariat for Economics (SECO) said.

The SECO trimmed its growth forecast to 2.0 percent for 2014 from the previous 2.2 percent and cut its outlook for 2015 to 2.6 percent from the 2.7 percent it predicted in March.

A slight recovery in some areas of exports helped the Swiss economy spring back from a weak fourth quarter, although its performance fell short of expectations.

“(We) continue to expect the economic upturn to strengthen up to 2015,” the SECO said. “However, the economic recovery may be somewhat slower than was forecast in March due to lagging exports.”

While exports of chemicals and pharmaceutical products have been rising, improvement in other areas such as machinery and metals exports has been more modest. Sales of high-end Swiss watches grew slightly in April.

With businesses still feeling the pinch from a strong Swiss franc, SECO said it has yet to see a broad revival in exports.

The Swiss National Bank capped the soaring franc at 1.20 per euro in September 2011, after investors fleeing the euro zone crisis bid the safe-haven currency up to record levels.

Swiss consumer price inflation, which had evaporated due to the strength of the economy, posted its biggest annual rise in May since the central bank capped the currency.

The SECO forecast consumer prices to rise by 0.1 percent this year, unchanged from the prediction it made in March, and saw inflation of 0.4 percent next year.

Swiss producer and import prices fell 0.8 percent in May from a year ago and were 0.1 percent higher compared with the previous month, data from the Federal Statistics Office showed on Tuesday.

The Swiss National Bank, which is due to make its quarterly policy announcement on Thursday, has forecast economic growth of about 2 percent for the year. (Reporting by Alice Baghdjian; Editing by Hugh Lawson)

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