IMF sees upswing for economy

The IMF believes things are looking up for the Swiss economy Keystone Archive

In its latest report on Switzerland's prospects, the International Monetary Fund (IMF) says the economy should be growing again in the second half of the year.

In its annual review of the Swiss economy, the International Monetary Fund said the worst of the slowdown may soon be over and that it expected growth of just under one per cent this year, a little below the government forecast of 1.3 per cent.

The IMF’s comments were echoed by the Swiss National Bank, which has predicted accelerating growth for the second half.

The IMF report is the latest in a string of evidence that Switzerland may avoid a full-blown recession. Last week, the Swiss Institute for Business Cycle research said its monthly economic indicator had shown its first improvement in two years.

Nevertheless, most economists believe the economy may show a zero growth rate for the fourth quarter of 2001. Fourth quarter GDP data is released on Thursday. They also think a negative growth rate may be registered for the first quarter of the year.

Recovery

But most now believe the economy is on the point of recovery and there is increasing speculation about the next interest rate move from the SNB.

It meets on March 21 to review monetary policy. With little risk of inflation but no firm indication yet of the recovery, the SNB indicated on Monday that there would be no change.

“Interest rate cuts would be justified if the current signs of recovery were not validated as the year progresses,” said SNB chief economist, Ulrich Kohli. “On the other hand, should the recovery be more robust that expected, it would be necessary to begin raising rates later this year.”

The SNB’s benchmark rate and policy target is the three-month London Interbank Offered Rate (LIBOR) currently set at 1.25 per cent to 1.75 per cent.

swissinfo with agencies