Swiss economy expected to show strong growth

The chief economist of the UBS group, Peter Buomberger, is predicting that the Swiss economy will show strong growth of 2.5 per cent in the early part of this year. For the year 2000 as a whole, he says average GDP growth will be two per cent.

The chief economist of the UBS group, Peter Buomberger, is predicting that the Swiss economy will show strong growth of 2.5 per cent in the early part of this year. For the year 2000 as a whole, he says average GDP growth will be two per cent.

In an interview with the economics weekly, Handelszeitung, Buomberger said all the large economic blocs were currently experiencing an upswing.

“In Europe, growth expectations will possibly be exceeded and we don’t see any signs of a cooling down in the United States,” he said.

“Latin America is developing much more dynamism, while Asia should next year achieve its earlier growth pattern of 6 per cent,” he said. “Even in Japan, which has been plagued with recession for some time, there are signs of a general economic recovery,” he added.

Buomberger said he saw no dangers of inflation in Switzerland for the time being. “We cannot remain outside international liberalisation for example in telecommunications and energy. Telephone charges and electricity prices are under pressure. For that reason, inflation is not an issue in the foreseeable future,” he commented.

He added that high crude oil prices were a shock which could be managed. “A strong market-oriented economy can these days cope much better with such a temporary influence. This exceptional crude oil price rise will not lead to any inflationary tendencies,” he said.

Buomberger also commented on the growing trend of central banks increasing their currency reserves in euros. Statistics show that at the end of the fourth quarter, the Swiss National Bank had 43 per cent of its currency reserves in euro, compared to 16 per cent three years ago (ecus).

“Central banks have increasing confidence in the future of the euro. The European Central Bank has as its primary task to secure the inner stability of the euro and that to date has been achieved. As far as purchasing power is concerned, the euro is one of the most stable currencies in the world,” he said.

Buomberger’s economic research department at UBS believes the euro will strengthen in the coming year to US$1.15 but will weaken slightly against the Swiss currency, falling towards SFr1.55.