Economy improving but slow recovery forecast

The Swiss economy is stabilising but a sluggish recovery in 2010 will result in high unemployment, government forecasters have said.

There will be a weaker decline of the gross domestic product (GDP) than was predicted, down 1.7 per cent compared with a 2.7 per cent contraction forecast in June, according to the quarterly economic tendencies report published by the State Secretariat of Economic Affairs (Seco) on Tuesday.

The GDP decline will be the strongest annual fall since 1975 but on an international scale the recession in Switzerland remains relatively mild.

The report found the recession had slowed in the second quarter in Switzerland and predicted a positive change underway for the rest of 2009.

For 2010, there will be moderate GDP growth, 0.4 per cent instead of -0.4 per cent forecast in June. Exports of goods and services should rise by 3.2 per cent but will most likely not be able to compensate for the -9.5 per cent decline suffered already this year.

With the economy only slowly picking up momentum, the rate of unemployment will increase from the 2009 annual average of 3.8 per cent to 5.2 per cent in late 2010.

Trade has continued to suffer in 2009 under the recession, with exports falling by 15 per cent in August compared with the same month last year and imports dropping by 13 per cent, the Federal Customs Office said on Tuesday.

Overall there was a trade surplus of SFr1.78 billion ($1.73 billion). Between January and August 2009, exports fell by 16 per cent and imports by 11 per cent.

Watch exports meanwhile fell by 19 per cent in August. Since the start of the year there has been a 26 per cent drop to SFr8 billion, which is expected to result in record low year-end figures of SFr12 billion.

swissinfo.ch and agencies