Business federation upbeat about Swiss economy

The Swiss economy is likely to grow in 2011 although other countries’ problems still put it at risk, says the Swiss business federation, economiesuisse.

In a report issued on Monday, the federation forecasts a growth of two per cent in gross domestic product in 2011, following 2.6 per cent in 2010.

It says that the construction and consumer branches are benefiting from the increased spending power resulting from rising wages, lower unemployment, lower interest rates and overall immigration. It predicts the inflation rate will remain low next year.

Both the domestic and export markets will continue to grow in 2011, although the growth rate in exports will not be as high as it was in 2010. The growth in exports will be driven by the healthy economic situation in Germany and the emerging countries, it says.

However, the federation admits that the strength of the franc is impeding exports.

“Swiss businesses need to increase their productivity,” Rudolf Minsch, chief economist of economiesuisse, told journalists at the presentation of the report. The main victims of the strong franc would probably be tourism, textiles and machinery, he said.

The report warns that the debt situation in the euro zone could lead to its collapse, which would push the Swiss franc sharply upwards. This in turn would have a negative impact on the Swiss economy.

Economiesuisse is also concerned about the economic recovery in the United States, which it says is not yet on a firm basis. A third possible danger is the tendency for bubbles to form in the emerging economies like China and Brazil: attempts to correct them would have a serious impact on the fragile world economy as a whole.

Despite its privileged position, Switzerland cannot behave like an island, the federation says.

Pascal Gentinetta, director of economiesuisse, stressed the importance for Switzerland of maintaining its position in international tax competition in the face of “more aggressive” action by the European Union.