The Swiss economy grew more strongly than expected in the third quarter, according to figures released by the government.
However, the State Secretariat for Economic Affairs (Seco) has now cut its economic growth forecasts for the rest of 2002 and for 2003.
During the third quarter, gross domestic product (GDP) - the value of all goods and services produced in the economy - grew by a real 0.6 per cent, compared with the same period last year.
Seco said this was due to an increase in consumer spending and exports, which compensated for a decline in capital investment.
The figures also showed that the economy expanded by an annualised 1.3 per cent on the previous quarter.
The Swiss National Bank said the results were in line with expectations, indicating that a third cut in interest rates this year was unlikely.
However, Seco announced it would be cutting its growth forecasts for the full year and for 2003. It said this was in response to weaker rates of growth in the global market and a decrease in consumer confidence.
It predicted that GDP for 2002 would decline by 0.2 per cent against a projected growth of 0.5 per cent, which was forecast in August.
The government now expects a one per cent growth rate in 2003, down from 1.7 per cent, as previously predicted.
Seco reported that there was unlikely to be any sign of any positive growth in the economy before 2004.
Going up or down?
Analysts appeared divided over whether the Swiss economy would grow or weaken further.
Stéphane Garelli at the IMD business school in Lausanne, believed the worst was over and a recovery was about to begin. The economy will prove to be more resilient in the current downturn, he claims, because the decline was caused by different factors than those that triggered previous recessions.
"The big difference between the past and this time is that, in the past, [downturns] were triggered by consumption," Garelli told swissinfo. "This time it was triggered by a significant drop in investment."
But consumer spending would be hard hit, Garelli added, if a war with Iraq goes ahead or there are further terrorist attacks.
"If there is an attack on a place where there is a high level of consumption, this will definitely frighten people," he said. "The economy is triggered by the general level of confidence and this, at the end of the day, remains with consumers."
Andreas Hoefert, an economist at UBS, was downbeat about Switzerland's economic prospects.
"The fourth quarter will be flat and I don't see a pick-up until the third quarter of next year."
Jan Amrit Poser of Bank Sarasin believed that there would be no decline and expected the economy to expand again from the second quarter next year.
SMEs hit hard
Small and medium-sized enterprises (SMEs) suffered considerably from the lack of serious economic growth during the third quarter, according to a survey conducted by Switzerland's biggest bank, UBS.
The hotel, construction and motoring industries were hit the hardest.
However, according to UBS, certain sectors are already showing the first signs of recovery: travel agencies, bakeries and printers have experienced a slight increase in growth.
Other industries that are strongly geared towards exports, such as machinery and watches, have also managed to buck the downward trend.
US economy grows
The Seco results came out a day after the United States published buoyant third-quarter figures.
GDP in the US grew by four per cent in a stronger-than-expected performance. The US government had predicted the economy would expand by 3.1 per cent during the quarter.
Consumer spending increased by 4.1 per cent, slightly less than the 4.2 per cent previously forecast.
However, this was a substantial increase on the second-quarter rate, which stood at 1.8 per cent.
The Federal Reserve, eager to boost an economy that had been stuck in low gear during the spring, cut a key interest rate in November by a substantial 0.5 per cent.
This was the first time this year that the rate was slashed and the 12th time since January 2001.
Many economists, though, are sounding a note of caution, predicting that the US economy is already on a downward spiral.
Weakening factors include a global stock market in turmoil and concerns about a potential war with Iraq.
The influential National Association for Business Economics has cut its forecast for the fourth quarter to 1.4 per cent, down from an estimated 2.7 per cent.
swissinfo with agencies
The Swiss government says GDP grew by 0.6 per cent during the third quarter.
However, it decided to cut the economic growth forecast for the rest of 2002 and for 2003.
Analysts are divided over whether the Swiss economy will contract or expand during the fourth quarter of 2002.