Swiss get good news about economy
There has been good news in the outlook for the Swiss economy this week, with two research organisations indicating an upward trend.
The Swiss Institute for Business Cycle Research (KOF) reported that its monthly business barometer for February stood at -0.80, up from a revised -0.89 in January.
The KOF’s leading indicator is considered a barometer of the economy and it signals turning points in GDP growth six to nine months ahead.
“We see a trend change especially in expected primary products’ purchases. That means that Swiss firms are planning to buy more inputs into production and that gives us a good idea what might happen in the future,” KOF senior economist Michael Graff told swissinfo.
Twenty-two leading economists in the Business Economists’ Consensus (BEC) have also revised their forecasts for economic prospects upwards.
The BEC, which includes economists from private sector firms, universities and the State Secretariat for Economic Affairs, said that GDP was expected to grow by 1.2 per cent in 2002, with growth rising to 2.2 per cent in 2003.
Exports and investment
They said that the drivers of the growth would be a pick-up in exports and investment.
Economists generally expect exports to recover as the worldwide economy revives, widely foreseen in the second half of the year.
“What will drive the rise in exports is the improvement in the business conditions in the United States and in the European Union, particularly Germany,” Graff commented.
Swiss exporters have moaned that the strength of the Swiss franc against the euro has exacerbated weak demand for products in the downturn but the Swiss National Bank has reacted this week by, in a spokesman’s words, “supplying the money market generously”.
“We have indeed witnesses a slight rise in the value of the Swiss franc but the Swiss National Bank has just reacted and tries to cushion this appreciation, so I think the concerns of the exporters are dealt with,” Graff said.
KOF, which is a part of the Federal Institute of Technology in Zurich, forecast last October a GDP growth rate of 1.7 per cent for this year. Graff said he was convinced that would have to be revised downwards.
Feeding the computers
“We are now feeding our computers with the latest data and we’ll come out with our new forecast on April 18…I actually think that the BEC forecast makes sense,” he commented.
“I suppose that growth of 1.2 per cent, if that should turn out to be true, is quite good and if you look at other indicators such as price stability and unemployment, Switzerland is in an extraordinarily pleasant position,” he added.
The BEC economists in their latest quarterly review feel that the franc will weaken slightly against the euro but will still hold below the 1.50 threshold.
They believe inflation will be 0.9 per cent in 2002, rising to 1.35 per cent in 2003.
That figure would still leave it below the two per cent level that the Swiss National Bank equates with the ceiling for inflation.
by Robert Brookes with agencies
In compliance with the JTI standards
More: SWI swissinfo.ch certified by the Journalism Trust Initiative
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.