Switzerland escapes recession

The Swiss economy is still sluggish but not in recession Keystone

The latest GDP figures released on Thursday are stronger than expected although the economy remains sluggish and is likely to remain so in the near future.

Data published by the State Secretariat for Economic Affairs (Seco) showed fourth quarter gross domestic product for 2001 up 0.1 per cent compared with the third quarter.

The third quarter figure has, however, been revised downwards to minus 0.3 per cent from plus 0.1 per cent.

Year-on-year, fourth quarter GDP fell to 0.4 per cent from 0.8 per cent in the third quarter.

Average GDP growth in 2001 was 1.3 per cent, down from three per cent in 2000.

The fourth quarter figures surprised most analysts, who had expected the economy to shrink.

Switzerland is now expected to escape recession, with most indicators pointing to an acceleration of the economy in the second half of the year. Last week, the monthly report from the Swiss Institute for Business Cycle Research showed an improvement in its indicator for the first time in two years.

But the economy is expected to remain in poor shape for the first half of the current year, says Seco. It has maintained its forecast for GDP in 2002 and 2003 respectively at 1.3 and two per cent.

Inflation is predicted to be one per cent for both years and unemployment 2.2 per cent.

Seco’s growth forecast is more optimistic, however, than that of the International Monetary Fund which last week said it expected Swiss GDP growth of 0.8 to 0.9 per cent this year.

Thursday’s figures appear to have stifled any lingering hope on the financial markets for a further interest rate cut from the Swiss National Bank, which meets later this month to discuss future monetary policy.

Debate on the markets is now turning to when the SNB might raise interest rates.

swissinfo with agencies