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Economy to pick up modestly in 2010

The Swiss Economic Institute (KOF) is forecasting a moderate upturn in the economy in 2010 with Gross Domestic Product growing by 0.6 per cent.

In a report issued on Friday, KOF, which is part of the Federal Institute of Technology in Zurich, said Swiss GDP reached its nadir in mid-2009. In comparison with the previous year, the economy is expected to shrink by 2.9 per cent in 2009.

KOF said the final figure for this year was an upward revision of 0.5 per cent compared with its autumn forecast.

The change is due in part to altered seasonal adjustments in service exports as well as to the development of the labour market during the course of the year, which turned out to be less negative than KOF had expected.

The modest growth next year will be reinforced by an increase in the export of goods (2.2 per cent) and stable private consumption growth (1.0 per cent), KOF said.

Interest rates will remain low, as will inflation. In 2011, GDP will see a growth of about 1.5 per cent. Unemployment will then reach its highest mark of 4.8 per cent.

Because of the slow economic recovery, the pressure on prices will probably remain low, KOF added. The institute is assuming that the Swiss National Bank (SNB) will use its leeway to keep interest rates at their current low level until at least mid-2010.