Swiss slowdown forecast

The Swiss economy will slow, but a pick-up is still expected during 2002 Keystone

The global economic slowdown that has broadened after last month's attacks on the United States will soon affect Switzerland, according to two leading Swiss institutes.

The Lausanne-based Créa Institute said in its latest report that the Swiss economy will enter a recession over the next six months. Recession is defined as two quarters of no growth, or negative economic growth.

The Créa Institute predicts Swiss growth will be 0.0 per cent in the fourth quarter of 2001 and minus 0.2 per cent in the first quarter of 2002.

The institute then expects a slow recovery with growth for 2002 as a whole expected to be 1.5 per cent. The growth forecast for the current year is 1.2 per cent. Last year’s growth rate was 3.0 per cent.

BAK expects growth

Meanwhile, the Basel-based research institute BAK said it expected Swiss gross domestic product (GDP) to grow by 1.8 per cent in 2002, up slightly from its 1.7 per cent growth forecast for 2001.

However, the Basel study said the economic outlook had worsened after the September 11 attacks in the US, making it more difficult to make predictions.

The Créa Institute’s forecast is based on the assumption that the US-led reprisals on Afghanistan will not last long. It says the global economy should pick up during the second quarter of next year.

Créa expects consumer confidence in the United States to severely decline in the wake of last month’s attacks, finally pushing the US economy into recession.

The Lausanne-based institute expects zero rates of growth in the US for the next two quarters.

The BAK also presented an alternative scenario in which the real GDP in the United States continued to slow in the first half of next year instead of improving.

In such a case, “the Swiss economy would then no longer reach growth of 1.8 per cent, but only growth of 1.2 per cent” in 2002, the BAK said.

swissinfo with agencies