Economic growth projections revised downwards

The State Secretariat for Economic Affairs (Seco) has revised its GDP growth forecast for 2011 downwards from 2.1 per cent to 1.9 per cent.

Citing a deteriorating economic outlook for Switzerland over the past few months, Seco economists also reduced their estimates for projected growth of the Swiss economy next year from 1.5 per cent to 0.9 per cent.

This is Seco’s second consecutive downward correction for 2012. In its June quarterly forecast the projected growth rate for next year was reduced from 1.9 per cent to 1.5 per cent.

“An important factor is the unfavourable foreign trade conditions such as the significant slowing of the world economy along with the high valuation of the Swiss franc even after introduction of a ceiling to the euro exchange rate,” a Seco statement said.

The Swiss export industry has been labouring under a historically strong franc this year, prompting the Swiss National Bank (SNB) to intervene earlier this month, setting a minimum exchange rate target of SFr1.20 to the euro.

Seco said the negative impact on exports and company investments could sharply slow economic growth in Switzerland over the short term.

Further upheavals on the financial markets resulting from further critical developments in the European debt crisis were mentioned by Seco as another risk for generating a worse economic outlook.