Swiss economy “stagnates”

The Swiss economy is still in the doldrums, according to the latest official figures Keystone Archive

The Swiss economy fell into recession last year and continues to remain comatose, according to new figures released by the government.

The State Secretariat for Economic Affairs (Seco) has published revised figures for 2001, showing economic contraction for the entire year.

This year, gross domestic product – the value of all goods and services produced in the economy – dropped by an annualised rate of 0.2 per cent in the first quarter. Second quarter growth came in at an anaemic 0.4 per cent.

While the figures fulfilled all the criteria for a recession, Aymo Brunetti, Seco’s chief economist, refused to use the “R” word.

He preferred to describe the current health of the Swiss economy as one of “hard stagnation”, adding that Thursday’s figures were provisional and could be revised.

Economy in recession?

However, analysts were unimpressed by Seco’s assessment of the Swiss economy, arguing that the latest economic indicators clearly pointed to recession.

“It looks as if investment will continue to shrink, and banking and services will have problems,” said Janwillem Acket, chief economist at Julius Baer private bank.

The revised GDP figures for 2001 showed a decline of 0.9 per cent in the final quarter, a fall of 1.0 per cent in the third quarter and a dip of 0.2 per cent in the second quarter.

Seco reiterated on Thursday that it expected the Swiss economy to pick up next year but did not repeat its previous forecast of 1.7 per cent growth.

Brunetti also announced that the economics ministry is planning to release around SFr350 million ($233 million), set aside for investment projects, in a bid to create jobs and kick-start the economy.

Weak second quarter

Responding to Thursday’s figures, the Swiss National Bank said the weak second quarter showed its interest rate cut of half a percentage point in May was appropriate.

“The figures confirm the expansionary policy of the National Bank,” said a spokesman.

Last month, the Swiss government said it expected the economy to grow by only 0.5 per cent this year, below its initial 1.0 per cent forecast.

A slower-than-expected recovery in the global economy was weighing on exports, it said.

Seco also said that its forecast for economic recovery next year still carried substantial risks.

“For a positive development of the Swiss economy it will be crucial that the European Union economies will soon start to recover significantly, and that the real value of the franc does not rise again,” Seco said in a statement.

swissinfo with agencies

Key facts

Gross domestic product dropped 0.2 per cent in first quarter of the year.
It rose by rose 0.4 per cent in the second quarter.
Analysts say the latest economic indicators point to recession.