Economy ready to grow as labour market suffers

State economists said on Tuesday that the Swiss economy stands poised to grow again, albeit it slowly, over the next two years.

The State Secretariat for Economic Affairs (Seco) revised its forecasts for the better, saying the country’s real gross domestic product could swell by 0.7 per cent in 2010. That follows the deepest recession since 1975 and a decline of 1.6 per cent for 2009.

Up until now Seco’s expert group of economic forecasters had predicted growth of just 0.4 per cent for the coming year. For 2011, the economy should gain some traction and grow by 2.0 per cent.

Seco’s chief economist, Aymo Brunetti, cautioned that uncertainties could still derail any nascent recovery, particularly as large central banks emerge from massive cash infusions injected during the height of the financial meltdown.

“This is anything but dynamic growth,” he said, adding that the risk of inflation remains low.

Figures remain bleak for the labour market, however. Economists do not expect much growth in job creation until 2011.

Unemployment hit an all-time high of 5.5 per cent in June. Seco expects that figure to drop to 4.4 per cent over the next two years, meaning roughly 176,000 people will be unemployed.

swissinfo.ch and agencies