The Confederation’s group of experts for economic forecasts has reduced its inflation forecasts up to 2025. For this year, inflation is thus expected at 1.2%, compared to 1.4% at the last count in June.
As for 2025, inflation in Switzerland is expected to reach 0.7%, the State Secretariat for Economic Affairs (Seco) announced on Thursday, which published these quarterly forecasts. This level is significantly revised downwards compared to the rate of 1.1% in June.
No change is expected for the Swiss economy this year, with gross domestic product (GDP) growth still expected at 1.2% in 2024. Seco points out in its press release that such a development would be ‘significantly’ lower than the average since 1980. Specialists point to a ‘rate of expansion of global demand (…) lower than the historical average over the coming quarters’.
After a second quarter driven mainly by the chemical and pharmaceutical sectors as well as the strength of merchandise exports, growth is nevertheless expected to be moderate in the near future, the press release states. Seco points out that the dynamics for industry and domestic demand remain weak. The appreciation of the franc is another brake, while European export markets are experiencing difficulties.
A slight deterioration is thus envisaged for 2025, with the expert group having trimmed its GDP forecast to 1.6%. This represents 0.1 percentage points less than the June estimates. The long-term average is set at 1.8%.
International risks, local effects
The number of unemployed is expected to increase, with the jobless rate expected to reach 2.4% this year and 2.6% in 2025. These forecasts remain unchanged.
The group of experts identified a series of cyclical risks, including armed conflicts in Ukraine and the Middle East. These could lead to a sharp rise in the prices of raw materials or transport costs, implying inflationary repercussions, according to the statement.
Monetary easing in major economies is proceeding at a slow pace, which increases risks related to the indebtedness and balance sheets of financial institutions. This outlook could lead to corrections in financial markets. Weakness in the German or Chinese economies is also among the factors that could seize up the machine, as is a potential downturn in the United States.
Weaker international demand would have an impact on Swiss foreign trade and the domestic economy, Seco points out. In such a context, the franc would continue to appreciate.
/ATS
Related News :