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Swiss economy looks up

Swiss industry expects an improvement in the fourth quarter


A poll by Zurich's Institute for Business Cycle Research (KOF) shows the Swiss economy regained strength in the third quarter and should continue to improve.

More than 5,000 companies were surveyed, and most reported that they expected higher sales in the coming months.

KOF said in a statement that the survey showed companies, especially those in the industry, building and insurance sectors, were optimistic about their prospects for the last three months of the year.

"For the coming months, one can expect a continuation of growth," KOF added.

Although industrial production is still stagnating, capacity utilization further improved in October, while in the construction sector activity also increased.

The picture in the hotel and restaurant industry, on the other hand, was mixed, with overnight stays rising but sales in restaurants declining, the institute said.

In the financial sector, banks and insurance companies saw business increase during the third quarter, a situation KOF expects to continue. But bankers are less optimistic, and expect demand to flatten out, especially business from small- and medium-sized companies.

Growth estimates

The survey forms a key component of the institute's monthly leading indicator, which has suggested recently that growth will accelerate in the coming months.

But KOF revised its own growth forecast for next year downwards from 2.1 to 1.5 per cent last month.

More recently, the State Secretariat for Economic Affairs said the economy was showing signs of improvement. Its experts upped their growth estimates for the end of the year and 2006.

The Basel Economics analysis centre said it also expected growth of 1.5 per cent in 2006, while Lausanne University's Créa Institute predicted a more optimistic two per cent for next year.

This data has led many specialists to believe the Swiss National Bank will raise interest rates later this year, possibly in December.

swissinfo with agencies

Key facts

In October Zurich's Institute for Business Cycle Research conducted a regular survey of companies active in industry, construction and services.
The 5,000 companies surveyed were asked about their expectations for the fourth quarter of 2005.
Bankers were the only group to express pessimism about the outlook.
They expect small and medium-sized enterprises to experience a downturn.

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