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Switzerland Government published their latest forecasts on the growth and inflation outlook for 2016 and 2017 on Wednesday. Swiss Federal Government's Expert Group, State Secretariat for Economic Affairs (SECO) said preliminary indicators now point to a renewed pick-up in Switzerland 's economy after three months of near stagnation.
SECO said that global economy is expected to lend momentum to the upturn in Switzerland. The Expert Group maintains its previous assessment and anticipates a GDP growth of 1.5 percent for full-year 2016. It expects to see a modest acceleration of GDP growth to 1.8 percent in 2017 and 1.9 percent in 2018, driven by both domestic demand and foreign trade.
Hard data from Switzerland substantiates the outlook. Current economic indicators point to an acceleration of growth in the fourth quarter of 2016. The Purchasing Managers' Index for the Swiss industry recently jumped to a level indicating a strong expansion. The KOF Economic Barometer recently settled at a level slightly above the long-term average, which also points to the resumption of economic growth.
Despite consumer sentiment remaining below the long-term average for several quarters, the most recent survey shows that consumer expectations regarding overall economic developments have improved significantly.
SECO believes that as the economic recovery proceeds, the labour market will gradually pick up. Job growth is expected to accelerate to a rate of 0.4 percent in 2017 and 0.6 percent in 2018. This should be accompanied by a gradual decline in the unemployment rate to 3.2 percent (annual average for 2017), and then to 3.1 percent (annual average for 2018). A recovery on the labour market and a moderate real wage growth should raise the purchasing power of private households.
Along with being upbeat about the Swiss economy, the Expert Group acknowledged potential risks to growth posed by the increased political uncertainties such as the Brexit referendum, the Italian electorate's recent rejection of constitutional reform, upcoming elections in Germany and France and the unexpected result of the presidential election in the USA.
FxWirePro's Hourly EUR Spot Index was at -135.81 (Highly bearish) and CHF Spot Index was at 6.3939 (Neutral) at 1210 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
