Institute says economy in excellent shape

The Swiss economy is continuing to expand strongly, with exports doing particularly well, according to a survey by the Swiss Institute for Business Cycle Research (KOF). But the study also suggested that demand might be slackening.

While painting an upbeat picture of economic conditions – based on a review of 5,000 companies – the Zurich-based Institute said demand might tail off in the second half of the year.

Over 80 per cent of companies contacted said they had increased their capacity in the second quarter, but that it had still not reached levels recorded in recent years.

In its review of the second quarter, KOF said improved economic conditions in the European Union and the continued weakness of the Swiss franc against the dollar had been very beneficial for Swiss exporters.

It also reported further evidence of a rebound in the hard-hit construction industry, which suffered badly during the recession of the 1990s.

The construction business grew by four per cent compared to the first quarter, according to the survey. It said 30 per cent of companies were reporting a shortage of labour, and 40 per cent of those questioned said they expected an increase in orders in the coming months.

The Institute is also positive about the services and consumer sectors. The hotel and restaurant trade recorded a three per cent increase in business compared to the same period in 1999.

Unemployment in Switzerland is currently 1.8 per cent, and inflation stands at two per cent.

swissinfo with agencies