by Matthew Allen, swissinfo.ch
The global economy is set for a dose of normality in the second half of 2012, forming the springboard for a sustained recovery, a leading economist has predicted.
But Switzerland will still have to endure a winter of hardship before the financial markets finally realise that the drivers of the real economy (industry and consumers) are fundamentally secure.
The KOF Swiss Economic Institute revised its summer economic predictions downwards on Tuesday. Gross domestic product (GDP) growth this year was downgraded to 2.3 per cent, from 2.8 per cent forecast in June, followed by 1.5 per cent in 2012 (1.9 per cent predicted in June).
The cooling expectations are the result of continued scepticism over plans to reduce national debt in Europe and the United States. The confusion has further inflated the value of the franc against the euro and the dollar.
The Swiss National Bank (SNB) intervened earlier this month to peg the franc at SFr1.20 against the euro, but the damage to exporters and the tourist industry had already been done.
Jan-Egbert Sturm, head of KOF, emphasised on Tuesday that the Swiss economy is still proving to be remarkably resilient in such volatile times. Exports continue to rise (even if many are being sold at cut prices), unemployment remains low and domestic consumption is still robust.
“Hard factors” strong
Sturm believes even the most pessimistic investor will start to take on a sunnier outlook once the summer takes hold next year. Sturm made a distinction between financial woes and the rosier condition of the real economy in many developed countries.
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Economic forecastsThe KOF Swiss Economic Institute has downgraded its expectations for GDP growth this year from 2.8% in June to 2.3% announced on Tuesday.
For next year, the institute expects growth to reach only 1.5%, down from its previous forecast of 1.9%. However, growth is expected to return to 2.5% in 2013 as market sentiment “normalises”.
Earlier this month, Seco predicted 2011 economic growth at 1.9% – down from the 2.1% it forecast in the summer.
Seco also expects GDP to stall next year, with a minimal 0.9% growth (1.5% predicted earlier this year).
BAK Basel also downgraded its outlook for this year from 2.4% to 1.9%, and for 2012 from 1.8% to 0.8%. In 2013 the forecasters expect more robust growth of 1.8%.
The Swiss Business Federation (economiesuisse) believes a 2.1% growth rate is achievable this year, falling to 1.7% in 2012.
Credit Suisse bank has forecast a more optimistic 1.9% this year (unchanged) and 2% for 2012.