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Economic outlook improves

Investment in contruction has grown this year, Seco says (imagepoint)

The Swiss economy is showing signs of improvement, leading government economists to up their expectations of growth for next year.

According to the State Secretariat for Economic Affairs (Seco), stronger exports and heightened domestic demand should mean better business prospects in 2006.

In a statement on Friday, Seco said it now expected growth of 1.3 per cent for this year, with gross domestic product (GDP) rising by 1.7 per cent in 2006.

In July, the government economists had predicted growth of just 0.9 per cent for 2005 and 1.5 per cent next year.

"In autumn 2005 the global economic prospects look relatively favourable, despite the fact that oil prices continued to rise all summer," the Seco report said.

The government forecast comes less than three weeks after the Swiss Institute for Business Cycle Research (KOF) revised its growth forecast for next year downwards from 2.1 to 1.5 per cent.

The Basel Economics (BAK) analysis centre said it also expected growth of 1.5 per cent in 2006, while Lausanne University's Créa Institute predicted a more optimistic two per cent for next year.

Upwards trend

"In Switzerland the economic prospects have improved significantly since the beginning of the year," Seco said. "Early indicators, based on surveys, show a clear upwards trend in recent months."

"It is encouraging that in comparison with other European countries, this tendency is not restricted to exports but is also reflected in stronger domestic demand."

Seco said that assuming the global economic situation remained positive, Swiss economic growth would speed up next year, fuelled by stronger exports and private consumption.

Inflationary growth would be moderate, Seco said, with an increase of around one per cent in 2005 and 2006.

Seco agreed with the Créa economists that the improvement in the economy would have no immediate knock-on effect on the job market. But it said that if the positive economic trend continued, the employment market would start to see an improvement next year.

swissinfo with agencies

Key facts

Seco predicts an increase in GDP of 1.3% in 2005.
This is roughly in the middle of the growth forecasts of the main economic observers: KOF 1.7%, BAK 1.2% and Créa 1.5%.
For 2006, Seco expects growth of 1.7%, against Créa's 2% and KOF and BAK's 1.5%.

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