Defying crisis: Swiss economy forecast to grow faster than US and EU
Despite the number of price increases set to arrive in Switzerland in 2024, a new analysis from the Sunday edition of the Tages-Anzeiger has painted a much rosier picture for the alpine nation. Experts speaking to the newspaper predicted that despite destabilising events both at home and overseas, the Swiss economy remains one of the world’s most resilient.
Switzerland defying global economic trends
The report noted that as the world continues to face inflation, slow growth and even recession, Switzerland’s economy appears to be ignoring the wider trends. Indeed, over the past few years, the economy has exceeded expectations, with experts predicting economic growth to continue into 2024.
Using data from the KOF Institute of ETH in Zurich, the Tages-Anzeiger predicted that while the world will struggle with “the expiry of pandemic relief measures, empty state coffers, sharp interest rate increases and losses in purchasing power”, the alpine nation will see GDP grow by 1,7 percent in 2024, faster than the Eurozone (1,2), USA (1,5) and United Kingdom (0,6), but slower than China (4,2).
Inflation is expected to rise slightly in the next year, but will still be lower than the USA and Eurozone and within the Swiss National Bank’s 2 percent target.
Swiss economy grows despite major crisis
The forecast is surprising, given that events in 2023 showed that the Swiss economy was not infallible. Indeed, the last 12 months saw the collapse of one of the country's largest banks, Credit Suisse, with 13.000 people losing their jobs. At the time, many feared that the crisis was a signal that difficult economic times were ahead.
“Some saw the reputation of the financial centre destroyed, but the economy was booming as if nothing had happened…Despite global wars and trouble spots, Switzerland shows remarkable resilience to crises,” the Tagi noted. For instance, last year saw the franc’s value grow by 10 percent against the US dollar and 6,5 percent against the euro.
Switzerland sees falling debt to GDP
It also continues the trend of the Swiss economy defying even government forecasts - the State Secretariat of Economic Affairs once predicted that GDP per capita would not return to pre-COVID levels until 2023, a milestone the country passed in 2021. What's more, average debt-to-GDP ratios for federal, cantonal and local authorities have been falling from their 28,3 percent high in 2020.
Finally, despite warnings from the Swiss Conference on Social Assistance, and while the government expects the rate of unemployment to increase from 2,1 to 2,3 percent in 2024, the percentage of people claiming social security recently fell to 2,9 percent of the population, a record low.
2024 will still provide major cost-of-living challenge
However, despite a rosy outlook on the economy, families and individuals in Switzerland will continue to face many price-related challenges in the new year. The 8,7 percent average rise in the cost of health insurance, combined with the now-confirmed rise in the cost of renting a house or apartment, means that people will still feel the pinch as the year goes on.
This will also present a challenge for the Swiss government, which warned back in 2023 that it will have to cut back on spending in a bid to balance the books. Federal budgets are already expected to be cut by 2 billion francs in 2024, with further cuts possible in the future.
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