The Swiss economy will gain momentum from the second half of this year, according to KOF forecasts. The Zurich Center for Economic Studies is counting on a resumption of exports to Europe.
The situation in European markets such as Germany, France and Italy is improving, and the Swiss economy should now benefit, the KOF said on the occasion of the publication of its economic barometer on Monday.
It therefore expects increased export dynamics for 2024, with growth in exports of goods and services (without valuables) of 2.9%, then 2.7% in 2025. The added value in the manufacturing industry should grow again after weak quarters, he notes.
The KOF forecasts an increase in real gross domestic product (GDP), adjusted for variations due to sport, of 1.2% for the current year and of 1.6% including sporting events. In 2025, sports-adjusted growth is expected to reach 1.8% or 1.4% including sporting events.
For 2024, inflation in the country will be lower than expected, with the Consumer Price Index (CPI) having been lower than expected in April and May. The institute therefore revised its forecast for 2024 by 0.3 percentage points down to 1.3%. The inflation forecast for 2025 was also lowered slightly to 1%.
This development points to higher wage increases in real terms, which should compensate for the loss of real wages over the past two years. For average AVS pensions, real growth amounts to 0.7% this year. Next year, the KOF expects real wage growth to be even higher, at 0.9%.
“Less dynamic” job creation
Job creation on the labor market will continue, but will lose momentum. “The strong employment growth that has characterized the Swiss labor market over the past three years will not continue to the same extent,” says the KOF. However, he expects the latter to remain stable due to solid GDP growth.
After an increase of 2% in employment and 2.3% in the active population in 2023, these two indicators should settle in 2024 at 1.5% and 1.2% respectively. In 2025, employment growth should be 1.2% and that of the working population 1.4%.
The KOF also expects a further reduction in interest rates in Switzerland, but not in the United States for the moment. The KOF assumes that, given the favorable inflationary environment, the Swiss National Bank (SNB) will carry out its next interest rate hike again in June and lower its key rate to 1.25%.
In the United States, the institute expects that the American central bank (Fed) will only lower its key rates in November.
ats, awp
