Wed, Sep 21, 2016 - Page 10 News List

Swiss momentum to pick up as euro area recovers

Bloomberg

Switzerland’s economy is expected to gain pace next year on the back of the recovery in the neighboring euro area and despite risks stemming from the UK’s Brexit referendum.

GDP will expand 1.5 percent this year and 1.8 percent next year, the Swiss State Secretariat for Economic Affairs (SECO) in Bern said on Thursday.

That compared with a June forecast of 1.4 percent and 1.8 percent respectively.

“Although the Brexit referendum did lead to increased international uncertainty, it has not resulted in any major volatility on financial markets to date,” and the moderate recovery in the euro area and other countries is expected to continue, the SECO said in a statement. “This set of circumstances can be expected to lead to positive effects for Switzerland in the form of higher foreign trade volume and a gradual stabilization of the economic recovery in the country.”

Having suffered a slowdown last year due to a strong Swiss franc, momentum has picked up in recent months thanks in part to improving exports. Yet spillover effects from Britain’s vote in late June to leave the EU have the potential to damp the region’s prospects. Moreover, Swiss consumer prices have slumped due to the overvalued currency, and last year suffered their biggest annual fall since 1950.

Swiss consumer prices are set to decline 0.4 percent this year and then rise 0.3 percent next year, the SECO said, in line with its last quarterly forecast.

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