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Swiss Government Says Growth to Pick Up 'Slowly' Into 2017

  • International economy should improve gradually, SECO says
  • Domestic demand to remain important pillar, SECO says

Economic momentum is set to pick up over the next two years in Switzerland, as the state of the global economy gradually improves, the government said.

Gross domestic product will expand 1.5 percent in 2016 and 1.9 percent in 2017, from 0.8 percent in 2015, the State Secretariat for Economic Affairs in Bern said on Thursday. SECO’s previous forecast, issued in September, predicted growth of 0.9 percent this year, followed by 1.5 percent in 2016. This is its first forecast for 2017.

“Domestic demand should remain an important pillar of the economy over the entire forecasting horizon,” the SECO said in a statement. While exports aren’t expected to provide any impetus in 2015, for the next two years it “anticipates positive contributions to growth from foreign trade in goods and services.”

Growth has slowed and consumer prices are tumbling as a result of the Swiss National Bank’s decision to drop its cap of 1.20 per euro last January. Even with the twin strategy of a negative deposit rate and currency market interventions, the franc is remains “significantly overvalued,” SNB policy makers said at their quarterly policy review last week.

Although Switzerland has managed to avoid a recession, growth stalled in the third quarter. Manufacturing companies and retailers are in particular facing headwinds.

Consumer prices are set to fall 1.1 percent this year and 0.1 percent in 2016, the SECO said. For 2017, it sees an inflation rate of 0.2 percent. While the forecast for 2015 is unchanged from September, it previously had predicted an increase of 0.1 percent next year.

Tough times for export-oriented industries means joblessness is set to rise. The SECO sees the unemployment rate climbing to 3.6 percent in 2016 from 3.3 percent this year, and then declining again to 3.4 percent in 2017.

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