The Swiss government on Thursday raised its economic growth forecast for 2015 but cautioned that a continued recovery in the euro zone was crucial to the Alpine nation's prospects. Switzerland's export-reliant economy has had to adjust to a surge in the Swiss franc's value this year after the Swiss National Bank abruptly abandoned its 1.20 francs per euro cap on January 15.
The State Secretariat for Economics (SECO) said it now expects growth this year of 0.9 percent, up from a previous estimate of 0.8 percent for 2015. It said growth in 2016 would remain below average and trimmed its estimate to 1.5 percent from 1.6 percent. "A key prerequisite for an improvement in the economic situation is that the global economy remains on an upward course and, in particular, that the euro zone is able to continue its recovery," economists for SECO said in a statement.
It also predicted inflation at -1.1 percent in 2015, down from -1.0 percent previously, and 0.1 percent in 2016, down from 0.3 percent. SECO's forecasts come before Thursday's regular monetary policy meeting of the Swiss National Bank (SNB). Switzerland's economy grew unexpectedly in the second quarter, narrowly skirting a recession as exporters weathered a strong franc better than some had expected. SECO economists said the mood among Swiss companies does not appear to have deteriorated over the summer, in part because the strong franc has lost some ground to the euro in recent months.
Nevertheless, SECO said the "rather restrained pace of economic activity" was likely to result in the country's unemployment rate rising to 3.6 percent in 2016. Its previous forecast was 3.5 percent. Earlier this year, uncertainty over whether Europe and Greece would resolve their debt crisis caused a flight into the Swiss franc.