Switzerland’s economy is expected to continue its upward trend, as new estimates from the State Secretariat for Economic Affairs project 1.3 per cent growth in 2013 and two per cent in 2014. But, unemployment could go up in the coming year.
The figures released by the federal government’s Expert Group on Thursday were slightly more tempered than figures released three months earlier, when growth of 1.4 per cent was projected.
Deteriorating global economic conditions – and in particular the weak financial situation in the eurozone – were cited as the reason for the slowdown in Switzerland’s economic activity in 2012. Further strengthening of the GDP in 2014 assumes that the debt crisis in the eurozone remains under control.
Although the market for exports slowed markedly in 2012 due to unfavourable economic conditions, including the strength of the Swiss franc, the Expert Group expected to see economic growth of one per cent for the year 2012. This is lower than in 2010 (three per cent) and 2011 (1.9 per cent), but clearly not comparable to the economic turmoil currently being experienced by many European countries.
In Switzerland, sectors of the economy with a domestic focus, such as construction, public and private sector services, are benefiting from a continued influx of foreign workers and low interest rates.
Banking interventions continue
The floor established by the Swiss National Bank (SNB) for the exchange rate between the Euro and the Swiss franc (one euro = SFr1.20) was thought to have helped mitigate the situation. The SNB announced on Thursday that it would continue to maintain that minimum rate and that interest rates would remain between zero and 0.25 per cent.
"The minimum rate is still a must," Economics Minister Johann Schneider-Ammann said.
The SNB was slightly more optimistic than Seco with regard to the GDP, predicting growth of between one and 1.5 per cent for 2013 in spite of eurozone troubles.
According to Schneider-Ammann, the Swiss economy is "making reassuringly good progress" but this is no reason to be complacent.
Unemployment could rise
According to the report from Seco, there is likely to be a temporary downturn in the labour market in the coming year. Although employment rose markedly until autumn of this year, recent surveys indicate that many companies – both in industry as well as in the services sector – are less willing to hire new employees. Growth in employment could therefore come to a temporary halt over the coming quarters until the economy starts to recover strongly again.
The Expert Group predicts annual average unemployment rates of 3.3 per cent for 2013 and 2014, compared with 2.9 per cent for 2012.