The Swiss economics ministry has slashed its growth forecast for 2005 by half a percentage point to 1.5 per cent.This content was published on January 28, 2005 - 11:43
The government said on Friday that it was concerned about the effects of the slowdown in Europe, a stagnating labour market and the strong franc.
“These factors are handicapping the pursuit of economic growth in Switzerland at the moment,” said the State Secretariat for Economic Affairs (Seco) in a statement.
It is the second time in three months that the government has cut its growth forecast for 2005. In October last year Seco revised the figure down from 2.2 to 2.0 per cent.
Officials said the slowdown was unlikely to have serious consequences, since a major weakening or economic stagnation were not on the cards.
But they said dwindling growth among Switzerland’s eurozone trading partners and the weakness of the dollar would hit exports.
Officials said the slowdown would mean less investment in the construction and capital-goods sectors. This was despite low inflation, which is expected to remain at around 1.0 per cent.
Private consumption, which accounts for around 60 per cent of Switzerland’s gross domestic product, is predicted to slow during the first part of the year.
Seco said the slowing of the economy would also hit the labour market, dashing hopes of job creation.
Unemployment hit an eight-month high in December, with more than 158,000 out of work. The official jobless rate stands at 4.0 per cent and is not expected to fall by much this year.
“The economic forecast for the whole of the year will not be enough to bring about an improvement in the labour market,” warned Seco.
Earlier this month, Seco chief Jean-Daniel Gerber told swissinfo that wide-ranging reforms were needed to inject dynamism into the Swiss economy and encourage competition.
swissinfo with agencies
Growth 2005 1.5%
Growth 2006 1.8%
Jobless rate 3.7%
In compliance with the JTI standards