KOF: Swiss economy will improve in 2023, but inflation threat remains
A new report by the KOF Swiss Economic Institute at ETH Zurich has suggested that, unlike the rest of Europe, the economic outlook for Switzerland remains positive. However, while GDP is expected to grow, the university warned that inflationary pressures remain a concern.
Outlook looks good for the Swiss economy in 2023
In the survey of 15 top Swiss economists, reported in RadioLac, the KOF said they expect the Swiss economy to grow for the next five years, albeit slowly. Experts predicted that real GDP in the alpine nation will rise by 0,8 percent in 2023, before achieving 1,6 percent growth a year over the next five years.
This growth will be helped along by an expected increase in investment from entrepreneurs, specifically through firms putting more money into new equipment and measures to solve the skills crisis. Despite the current housing shortage, the KOF predicted that the construction industry will be one of the few industries to decline, with investments expected to fall by 0,8 percent on average this year.
The economic forecast for most international companies is positive, with export growth from Switzerland revised up from previous predictions for the year. The KOF said that Swiss exports are set to increase by 3,1 percent this year, and 3,6 percent the year after. The Swiss franc is also expected to remain stable and strong, remaining slightly more valuable than the euro in the year ahead.
Rate of unemployment set to fall in Switzerland in 2023
As the number of jobs in Switzerland left unfilled is still high, the KOF predicted that the percentage of people claiming Swiss unemployment insurance will decrease, but only slightly. Experts predicted that the unemployment rate in the alpine nation will fall from 2,2 percent to 2,1 percent by the end of 2023, before increasing back up to 2,2 percent by the end of 2024.
This is in spite of a recent report by the AWP News Agency which found that the 50 largest companies in Switzerland are advertising 20 percent fewer roles than last year. Swiss supermarkets, internet providers and the postal service have all confirmed that they are looking for far fewer new employees than six months ago.
Inflation and interest rate hikes still on the cards in Switzerland
Finally, the KOF noted that inflation should remain a significant issue for the economy this year. The organisation predicted that inflation will fall to 2,4 percent in 2023 - still outside the target set by the Swiss National Bank (SNB) - before falling to 1,3 percent in 2024 and 1,1 percent the year after.
To facilitate this fall, experts anticipated that interest rates in Switzerland will rise in both the short and long term, with the KOF previously forecasting an overall interest rate of 1,69 percent in three months, 1,82 in a year and then between 1,21 and 1,44 percent once inflation is under control. Bear in mind that this prediction was made before the SNB raised interest rates to 1,5 percent on March 23.