Think tanks confirm economic slowdown

Two economic think tanks have forecasted falling economic growth in Switzerland for 2009 but remain less pessimistic than the country's government and central bank.

The KOF Swiss Economic Institute at the Federal Institute of Technology in Zurich on Wednesday predicted negative economic growth of 0.5 per cent, in line with government calls of a recession.

The Créa Institute of Applied Macroeconomics at Lausanne University, while lowering its forecast to the lowest level since the third quarter of 2005, said the economy would expand by 0.2 per cent.

Both the State Secretariat for Economic Affairs (Seco) and the Swiss National Bank (SNB) have said Switzerland will enter a recession in 2009.

Seco foresees a short period of negative growth, with economic activity at -0.8 per cent, followed by a modest recovery in 2010.

The Swiss National Bank predicts growth will be -0.1 and -0.5 per cent.

KOF said global economic conditions were continuing to damage the economy and that private consumption was expected to decline on the “strength and duration of the recession”.

“Growth in Switzerland will only resume at the end of 2009,” it said, predicting gross domestic product to grow by 0.6 per cent in 2010.

Almost all sectors of the economy would suffer in 2009, KOF said, with a few areas such as public health unaffected. It foresees unemployment rising to 2.8 per cent in 2009, compared with Seco’s forecast of 3.3 per cent and up to 3.7 per cent by the SNB.

Créa continued to express optimism in the state of the construction sector and labour market. It said growth in western Switzerland would be higher than in the rest of the country.