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Economic growth stays modest

The price of oil put the brakes on the Swiss economy

(Keystone)

High oil prices may not have sounded the death knell for economic growth this year but they did hold it back, say economic experts.

The Basel Economics (BAK) analysis centre said that economic growth this year - 1.2 per cent - lagged well behind the 4.5 per cent the world economy is expected to grow.

The centre, though, predicted that 2006 would be rosier for Swiss business as gross domestic product would increase by 1.5 per cent.

The unemployment rate would also fall, from 3.8 to 3.6 per cent, thus pushing the economy to perform better.

BAK was counting on the domestic market becoming more dynamic next year.

Positive developments in certain key segments, such as in the financial, chemical, pharmaceutical and tourism sectors, were likely to have a knock-on effect on private consumption.

The latter should grow by at least 1.2 per cent.

According to BAK, exports will also increase by three per cent, compared with 1.8 per cent in the current year, thanks mostly to more demand for Swiss goods from the euro zone.

Regional growth

BAK also announced that a number of Swiss areas would experience an economic boost in 2006.

The Basel region would experience the most economic growth - 2.1 per cent. This, according to the economic centre, was because it played host to a number of chemical and pharmaceutical companies.

Above average growth rates were predicted for the Zurich-Aargau area, as well as for the environs of Lake Geneva.

The southern and eastern parts of the country could expect to experience the least economic growth.

BAK's forecasts for the Swiss economy were in line with those of banks and other research institutions.

Earlier this month the Swiss Institute for Business Cycle Research (KOF) revised downwards its growth forecast for next year from 2.1 to 1.5 per cent.

swissinfo with agencies

Key facts

BAK predicted the following for 2006:
The Swiss economy would grow by 1.5 per cent.
Private consumption would increase by between 1.2 and 1.4 per cent.
Unemployment would decrease from 3.8 per cent to 3.6 per cent.
Exports would grow by three per cent.

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