Swiss Govt Lowers GDP Forecast Amid Energy Price Pressures: SECO

(RTTNews) - Switzerland's economy is expected to grow less than previously estimated this year and next, as the economic prospects are hampered by a tense energy situation and sharp price increases, especially in Europe.

The expert group of the federal government forecast gross domestic product to grow 2.0 percent this year instead of the 2.6 percent growth estimated previously in June, the State Secretariat For Economic Affairs, or SECO, said Tuesday.

Likewise, the projection for next year was downgraded notably to 1.1 percent from 1.9 percent in the summer forecast.

Experts have significantly lowered their expectations for global demand, especially among Switzerland's main trading partners.

The report said the Swiss economy would be severely affected if there were to be serious gas or electricity shortages in Europe with large-scale production stoppages and a marked downturn.

Further, a negative scenario like this will probably lead to high domestic price pressures and a downward economic trend.

The expert group revised up its inflation forecast to 3.0 percent this year and 2.3 percent for 2023. In turn, this is likely to result in a cooling of domestic demand.

Despite strong employment growth in the first half of the year, unemployment is expected to rise in the fourth quarter in line with slowing economic growth.

The average annual unemployment rate is projected to come in at 2.2 percent for this year, followed by 2.3 percent in 2023.

Pandemic related setbacks also stand as challenge for the Swiss economy as a result of new virus variants, experts assessed. In particular, China's economy could be further weakened by ongoing strict containment measures, with repercussions on the global economy.