The KOF Swiss Economic Institute said the economy will expand only marginally this year and cautioned that the appreciation of the Swiss franc following the removal of the currency ceiling will weigh down heavily on the business cycle.
In the Spring Forecast, the think tank said gross domestic product will grow 0.2 percent in 2015, much slower than the 1.9 percent expansion projected in the Winter Forecast. In January, the think tank said the economy would contract 0.5 percent.
The KOF forecast GDP growth to return to positive in the fourth quarter. For 2016, growth is estimated to be at 1 percent instead of 2.1 percent projected in December.
Exporters in particular are feeling the effects of the strong franc, the institute said. Due to falling prices and consumer tourism, private consumption is initially holding up well. The 2015 growth forecast for exports was halved to 1.2 percent from 5 percent.
Imports are expected to rise 2.4 percent compared to 3.3 percent projected in December.
The unemployment rate is expected to rise slightly to 3.4 percent. A higher 3.8 percent is projected for next year. Consumer prices are forecast to drop 0.8 percent in 2015 and to remain flat next year.
The material has been provided by InstaForex Company – www.instaforex.com