Government cuts growth forecast

SECO downgrades its forecast Keystone

The Swiss government agency in charge of economic forecasts cut its economic forecast to 1.6 per cent in 2001 from the 1.8 per cent it saw only last month.

The State Secretariat for Economic Affairs (SECO) also reduced its forecast for economic growth in 2002, cutting it back to 1.3 per cent from an original 2.0 per cent.

SECO cited slower global growth, the impact of suicide attacks in the United States, the Swiss airline crisis and the strong Swiss franc as reasons for the revision.

It also said it expected the jobless rate to rise 2002, inflation to stay low and growth rates around two per cent in 2003.

Commenting on the figures, the Swiss National Bank (SNB) said the revised forecasts vindicated its two interest rate cuts in September which had in part reflected a rapid rise in the Swiss franc as the international sense of crisis deepened.

The central bank left key interest rates unchanged on Thursday, echoing a move by the European Central Bank, although the SNB has repeatedly stressed it acts independently of its euro zone counterpart.

An SNB spokesman said monetary policy was independent from government forecasts, but noted; “The revised outlook shows that our recent rate cuts were not wrong.”

The SNB cut rates three times this year and dealers say another quarter-point cut is likely before year-end.

swissinfo with agencies