Switzerland’s leading economic indicator has plunged to a seven-year low, further dimming chances of an upturn by the end of the year.
The news comes at the end of another bleak week for the Swiss economy, with the loss of around 6,000 jobs.
The Swiss Institute for Business Cycle Research (KOF) revised its indicator downwards from –1.02 in April to –1.16 in May.
The closely watched indicator points to the likely performance of the Swiss economy in six to nine months’ time – the lower the number, the worse the chances of recovery.
“The downward tendency in the leading indicator, which has now been observed since September 2002, signals a continued slowdown in economic growth until at least end-2003,” the institute said in a statement.
KOF researchers said they did not expect to see any growth in Switzerland’s gross domestic product (GDP) by the end of 2003. They concluded that zero, rather than negative, growth was the best that could be hoped for.
The institute said the gloomy readings reflected a steeper decline in commissions and new orders.
“That’s really not very good, because those are exactly the areas where an impulse for the upswing should be coming from,” said UBS economist Thomas Kaegi.
Massive job cuts
The KOF report rounds off a grim week during which more than 6,000 workers have lost their jobs.
The national carrier, Swiss, announced on Tuesday that it was shedding 3,000 staff - a third of its workforce - in a bid to remain airborne.
The economics ministry estimates that a further 2,500 jobs will disappear in the aviation sector as a result of the restructuring at Swiss.
Among the companies affected are SR Technics, Swissport, Gate Gourmet, Cargologic and Unique, which operates Zurich airport.
Basel and Zurich suffer
Around 40 per cent of the predicted job losses will hit Basel and Zurich, while Geneva and canton Ticino will also experience staff cutbacks.
One of Switzerland's leading publishers, Zurich-based Tamedia, announced on Thursday that it was axing 140 jobs as part of plans to restructure its magazine division.
However, business analyst Beat Kappeler told swissinfo that the Zurich region was dynamic enough to absorb the shock and would probably see other airlines take on sacked aviation staff.
He added that he was optimistic for the economy, highlighting the strength of consumer spending in Switzerland, as well as the possibility of the construction industry picking up.
“The banking sector could turn around, if capital markets do the same,” he added.
swissinfo, Tania Peitzker
The KOF's economic outlook indicator has dropped to its lowest level in seven years.
The institute's researchers don't expect see any growth in Switzerland's GDP by the end of 2003.
They added that the outlook reflected a steeper decline in commissions and orders.
KOF's gloomy perspectives came after 6,000 job cuts were announced this week.
National carrier Swiss slashed 3,000 jobs, and another 2,500 are expected to disappear in the aviation sector.