Glimmer of hope for Swiss economy

Switzerland's workers received some positive news Keystone

A leading economic indicator suggests Switzerland's sluggish economy is unlikely to deteriorate further next year, although any recovery would be fragile.

Improved sentiment among Switzerland’s exporters, banks and insurers has offered a glimmer of hope that the current downturn may have reached its lowest point.

The closely watched Swiss Institute for Business Cycle Research (KOF) index rose to -0.64 in July, up from a revised -0.71 in June.

The quarterly index is based on a survey of more than 4,300 businesses and provides a guide to the potential performance of the Swiss economy in six to nine months’ time.

A negative figure indicates business sentiment is low and that the chances of recovery are slim.

Although the index has risen slightly, KOF said it was too early to say whether the Swiss economy has started a turnaround.

“The change in trend of the indicator signals that a continuation of the slowdown in growth into next year is not likely,” Bernd Schips, the head of KOF said.

Looking for a pulse

Richard Etter, head of KOF’s business survey department, told swissinfo there were “very small signs” of hope within the currently depressed national economy.

“We’ll see some possible improvements in the export industry and some positive signs in the consumer sector,” Etter said.

“But we still see some negative developments in the hotel and catering [sectors], and in construction,” he added.

Exporters have been buoyed recently by falls in the value of the Swiss franc against the US dollar.

Grim jobs outlook

KOF’s latest figures came amid new evidence that Switzerland’s unemployment situation is deteriorating.

The Federal Statistics Office said that its index of payrolls fell 0.9 per cent during the second quarter, compared with the same period last year.

The index, which is based on a survey of Swiss companies, showed the number of full-time jobs sliding 1.4 per cent to three million. Switzerland has a population of around 7.3 million.

Etter said the Swiss economy needed to grow by at least two per cent to generate enough new jobs to reverse the unemployment trend.

However, an economic expansion of that magnitude is highly unlikely, with most forecasters predicting GDP growth of well under one per cent.

swissinfo, Jacob Greber in Zurich

Key facts

The KOF’s economic outlook indicator has risen slightly to -0.64 in July from -0.71 in June.
The institute’s researchers believe the economic downturn could ease at the start of next year.
At the same time, unemployment has worsened in the second quarter of 2003.
The Federal Statistics office said the number of people holding down a job dropped 0.9 per cent.