The Swiss economy is benefiting from strong domestic demand and should see a further recovery as the outlook for the euro zone brightens, the government said on Thursday, as it raised its 2013 growth prognosis.
But it warned that a dramatic recovery in the export industry, which has proven to be relatively crisis-resistant in recent years, was still slow in coming.
The Swiss economy is likely to achieve a «pleasing» 1.8 per cent growth during 2013, said economists at the State Secretariat for Economic Affairs (SECO). This was up from the 1.4 per cent predicted in June. They also lifted their outlook for 2014 to 2.3 per cent, compared to 2.1 per cent previously.
«As the economy firms up there is also likely to be a gradual downward reversal in the unemployment trend next year,» they noted.
SECO said that the Swiss economy was once again proving to be resilient and that the robust domestic economy was playing a key role, helped by the steady level of immigration, low interest rates and absence of inflation.
But the difference between the vibrant domestic and subdued export demand is noteworthy, the economists remarked. Exports of goods are continuing to suffer from slow sales markets, influenced by the recession in the European Union, the continuing problem of price competitiveness for Swiss exporters and a slowdown in emerging markets.
In terms of economic risks, SECO said that the international environment had improved slightly during the course of 2013.
«Stronger demand from key Swiss sales markets would give the export industry an additional impetus and could further accelerate the recovery in the Swiss economy,» SECO said.
Figures for August, also published on Thursday, showed that Swiss exports fell on declining trade with the EU, with the pharmaceutical and machinery branches sagging but exports of Swiss watches improving.
Swiss National Bank
Meanwhile, Switzerland’s central bank has, as expected, decided to maintain its minimum exchange rate of CHF1.20 per euro. It stated that its cap on the franc remained «essential» and vowed to defend it with unlimited currency interventions and further measures if necessary.
«It prevents an undesired tightening of monetary conditions were the upward pressure on the Swiss franc to intensify once again. The target range for the three-month Libor will stay at 0.0–0.25 per cent,» the Swiss National Bank said in a statement.
According to the bank, the risk of «less favourable global economic developments» had decreased somewhat compared to the last quarter. But the bank also pointed to international economic uncertainties, such as structural problems in Europe.
«Moreover, the outlook for the emerging economies has deteriorated, and events in the Middle East could push up the oil price. In addition, sudden changes in expectations on the further course of monetary policy in key currency areas could lead to increased volatility on the financial markets,» the bank warned.