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Swiss gov’t expects economic slowdown in 2023 but no recession

Published by Uma Rajagopal

Posted on December 13, 2022

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ZURICH (Reuters) – The Swiss government expects the country’s economic growth to slow next year although it should avoid a recession, it said on Tuesday, with no energy shortages causing widespread production losses.

The economy will expand 2.0% this year, the same level as its September forecast, before growth slows to 1.0% in 2023, the State Secretariat for Economic Affairs (SECO) said.

“This would point to sluggish growth for the Swiss economy, but not a severe recession,” SECO said in a statement.

It had previously expected GDP to expand by 1.1% next year.

The figures, which are adjusted to remove the effect of large sporting events, assumed there will be no energy supply shortages either this or next winter.

“However, the energy situation in Europe is likely to remain tense with gas and electricity prices running high,” SECO said.

“Furthermore, high international inflation and the tightening of monetary policy are likely to curb demand.”

GDP was expected to expand by 1.6% in 2024, SECO said in its first forecast for that year, as the energy situation normalises, inflation eases and the global economy recovers.

Swiss inflation is expected to fall from a forecast 2.9% in 2022 to 2.2% next year, the department said, before dipping to 1.5% in 2024.

Switzerland’s economy is traditionally one of the more resilient in Europe due to its large pharmaceuticals sector and low unemployment.

Other agencies such as the KOF Institute have reduced their 2022 and 2023 growth forecasts, but still expect output to increase, while the PMI reading for November remained positive.

The Swiss National Bank is due to give its latest economic forecasts when it announces the outcome of its quarterly monetary policy review on Thursday.

(Reporting by John Revill; Editing by Michael Shields)