Switzerland government expert group cuts 2012 GDP growth forecast

18 September 2012 17:04  [Source: ICIS news]

LONDON (ICIS)--The Swiss government’s economic expert group has reduced its 2012 forecast for the country’s GDP, mainly because of the slowdown in the global economy, it said on Tuesday.

The experts cut their 2012 GDP growth forecast for Switzerland to 1.0%, from previously 1.4%. For 2013, they reduced their forecast to 1.4%, from previously 1.5%.

However, despite reductions, the expert group does not expect a “marked recession” in Switzerland as the country’s domestic economy remained robust, it said. 

Also helping the economy was the Swiss central bank’s exchange rate floor against the euro, which create stability for Switzerland’s export industry, the group said. Chemicals and pharmaceuticals are Switzerland’s largest export industries.

“The Swiss economy remains in better shape than other European countries, despite the unmistakable weakening,” it said.

The group also said that the decision by the European Central Bank (ECB) to buy government bonds reduced the risks of a further escalation in the eurozone sovereign debt crisis. However, “these risks still remain,” it added.

“This [ECB] decision signals a clear commitment to use all available resources to stem the crisis,” the group said.

“However, even if this brings certain stability to the financial markets, it is likely that the ability of the euro region to escape the recession will be a challenging process,” it said.

“The tough measures aimed at achieving fiscal policy consolidation, together with the processes of adaptation in the private sector, particularly in the southern European countries, are continuing to have a dampening effect,” it added.

Meanwhile, regions outside Europe should overcome their economic downturns or slowdowns next year, the group said.

In China, politicians have the will and financial resources to stabilise banks, property markets and the economy, which suggests there will be no hard landing in China, the group said.

Meanwhile, in the US a moderate economic expansion seems to continue as the slowdown in industry is being offset by the ongoing recovery in the construction and property sector, the group said.

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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