A leading think tank has downgraded its forecast for Switzerland's economic performance this year. The move is the latest evidence that the Swiss economy is being affected by the global economic slowdown.

The Zurich Federal Institute of Technology's Economic Research Unit (KOF) says in its autumn statement that Gross Domestic Product should expand by 1.9 per cent this year. It forecast a further slowdown to 1.7 per cent in the following year before accelerating to 2 per cent in 2003.

KOF's report says that exports are expected to grow at an unchanged rate in the 2002 but that imports would expand reflecting a pick-up in the world economy.

It also said that it saw no immediate inflationary dangers.

It added that it expected inflation to average 1.2 per cent this year, down from 1.6 per cent in 2000. With crude oil prices expected to fall and the Swiss franc expected to remain strong, inflation should average 1.1 per cent in 2002 and 1.2 per cent in 2003.

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