GENEVA: Swiss banking giant Credit Suisse revised down its forecast of Switzerland’s GDP growth for 2017 to 1.0 percent from 1.5 percent, while leaving unchanged its forecast for 2018 at 1.7 percent, according to its quarterly report on Swiss economy published on Tuesday. According to the latest version of “Monitor Switzerland”, Swiss gross domestic product (GDP) after the first half of the year was just 0.3 percent above its prior-year level, and economic growth in the second quarter once again proved modest. The report warned that while consumption growth should remain roughly within the framework of the preceding years (1.5 percent) in 2018, the potential slowdown in immigration is reducing the growth potential of consumption. Net migration in July 2017 was at its lowest level since the introduction of the full free movement of persons back in 2007. Meanwhile, employment growth is stumbling. After no jobs were created in net terms in 2016, the number of employees in the first half of 2017 rose by a meager 0.2 percent, according to the report.
The report suggested that while the core growth drivers, such as immigration and property cycle, are expected to lose weight, productivity boost in the domestic economy is needed for sustained prosperity gains. Productivity must be driven either by investments in forward-looking projects and sectors or by efficiency enhancements, the report added. Credit Suisse anticipated acceleration in the growth of investments in equipment to 3.5 percent in 2018, as almost 40 percent of the companies surveyed claimed in September that they intended to invest more in the coming year. It also believed that the Swiss National Bank (SNB) will prefer to raise interest rates first before contemplating a reduction of its foreign currency reserves once monetary policy tightening becomes pertinent.
