Experts slightly more pessimistic about Swiss economy
Economic experts are slightly less optimistic about the Swiss economy than they were three months ago. They are thus lowering their growth forecast slightly. However, the experts are somewhat more confident about inflation.
The economists surveyed by the KOF Swiss Economic Institute are revising their forecasts for Swiss economic output slightly downwards. They now expect gross domestic product (GDP) to grow by 1.1% on average in 2024. In December, the growth forecast was still at 1.2%, adjusted for sporting events. As last December, the unadjusted forecast is +1.4%.
Expectations are significantly lower than before, particularly for capital expenditure on equipment. According to the forecasts, this is likely to fall by 0.3% in 2024. In the last survey, a figure of +1.1% was still expected.
The initial forecast for 2025 is also +1.4% (not adjusted for sport) and +1.7% (adjusted for sport), KOF said on Monday in its quarterly KOF Consensus Forecast.
Milder inflation
The economic experts are once again lowering their inflation forecast for the current year and now expect consumer prices to rise by an average of 1.4% in 2024 (December: +1.6%).
A figure of +1.2% is then forecast for 2025, which would still be within the range of 0-2% targeted by the Swiss National Bank (SNB). In the long term, the experts expect an inflation rate of 1.0%.
As in December, the average unemployment rate is expected to be 2.2% in 2024 and 2.3% in five years.
Falling interest rates expected
Most survey participants also expect short- and long-term interest rates to fall over the course of the year. The short-term interest rate is therefore likely to be 1.57% in three months and 1.17% over the next 12 months. The KOF points out here that the latest interest rate cut by the SNB has not yet been taken into account. The ten-year federal bond (spot rate), for example, will yield 0.9% in three months and 1.0% in one year.
The economic experts surveyed also forecast a slight appreciation of the Swiss franc against the euro and the US dollar. They are also more optimistic about the development of Swiss equities as measured by the SPI.
Twelve economists took part in the survey for the KOF Consensus. The survey took place between February 29 and March 20, so before the SNB’s interest rate decision last week.
The KOF Consensus expert survey should not be confused with the KOF Economic Forecast. This will be published on March 26.
Adapted from German by DeepL/dkk/ts
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