Poor budgetary discipline in Europe may hinder economic upturn in Switzerland, according to a report released by the Swiss Economic Institute (KOF) on Friday.
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The institute predicts growth at a rate of 1.8 per cent this year, with private consumption and foreign trade accounting for most of it.
Yet KOF expects slightly weaker GDP growth (1.6 per cent) in 2011. It attributes this partly to unfavourable fiscal policies in other European nations.
It notes that while Switzerland is in a comparatively strong position, it is “not immune to the turbulence caused in other regions by excessive deficits and adjustment measures”.
It also predicts a decline in the Swiss unemployment rate, with a forecast of 3.8 per cent in 2010, and 3.3 per cent in 2011.
While noting that the labour market has recovered faster than expected, it says that wage growth is set to be moderate.
KOF is part of the Federal Institute of Technology in Zurich.
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