UBS expects no 2nd quarter economic recovery

Swiss companies are continuing to struggle in a difficult economic environment, said bank UBS on Wednesday.

In a report based on a survey of around 400 companies in the first quarter of 2009, UBS said “exporters are particularly feeling the heat”.

However, UBS said that domestically oriented industries and service providers are faring better.

New orders, production, sales and earnings melted away in the first three months of the year, and headcounts were reduced across the board. And there is still no end in sight to the slide.

“This trend is somewhat less pronounced in the service sector. However, the outlook for service providers is also predominantly negative,” UBS reported.

“The UBS Business Cycle Indicator, a trend barometer for Swiss gross domestic product, is continuing its downward slide. Down 1.2 per cent and 1.5 per cent respectively in the first two quarters of this year, it provides a clear indication of the Swiss economy’s recessionary trend.”

UBS expects the downward momentum to increase even further and is forecasting a 2.8 per cent contraction in real GDP in 2009 as a whole.

The UBS outlook is backed up by a report, also issued on Wednesday, by the KOF Swiss Economic Institute which said the year-on-year growth rate of Swiss GDP was expected to be “clearly negative”.