Companies plan more investments this year

Swiss companies will be looking closely at new investments Keystone

A majority of Swiss companies say they are prepared to invest more now that the economy shows signs of growth and profits have improved.

This content was published on March 2, 2005

The latest survey from the Swiss Institute for Business Cycle Research (KOF) indicates that new investments should help slightly boost economic growth this year.

The survey, carried out between October and December last year, shows that projects are more likely to go ahead this year as an export-led recovery improves domestic sentiment.

The number of companies planning to invest more in 2005 is significantly higher than those considering spending less.

Investments should continue last year's trend, when they also increased slightly.

Spending is expected to go up in all three sectors surveyed – industry, building and services.

"The companies are very conservative, but they are slightly better ... than last year," said Bernd Schips, the institute’s director.

Big change

The biggest change is in the building industry.

For the first time in five years, more companies said they were likely to increase their investments in 2005 than those who planned to spend less.

A quarter of all building companies said they would spend more on equipment, while 15 per cent warned they would be cutting their outlay.

In the services sector, nearly half the companies who answered the survey reckoned they would invest more this year, while one in five said it was considering cuts.

These figures do no include transport services, as spending on the federal railways – which accounts for a large proportion of investments – dropped with the end of the Rail 2000 project.

Industrial companies’ planned investments mirror those of the services sector.

The chemical industry, along with precision machinery makers, is most likely to spend more this year, while machine builders are more cautious with their funds.

Funding expansion

KOF researcher Daniel Lampart said companies were now more prepared to spend money that had been used for the past two years to consolidate and upgrade operations.

He added that money is more likely to be invested abroad, both by industrial companies and by financial services and telecommunications firms.

Last week, key Swiss exporters said they expected last year’s growth trend to continue in 2005, after exports from mechanical and engineering firms rose in 2004.

swissinfo with agencies

Key facts

KOF, based at Zurich's Federal Institute of Technology, is one of Switzerland's leading economic research centres.
It produces a range of regular economic forecasts and surveys, and is known for taking a somewhat longer-term approach than many similar organisations, attempting predictions up to two years into the future.

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