Swiss Growth to Quicken in 2013; Rates Seen On Hold -OECD
Swiss economic growth should pick up in the second half of next year as an expected recovery in global export markets drives demand for the Alpine country's goods, the Organization for Economic Cooperation and Development said Tuesday.
Swiss gross domestic product growth is forecast to slow to 0.8% in 2012, but then quicken to 1.1% next year and 2.3% the year after, although the outlook for the euro-zone economy, Switzerland's biggest market, remains highly uncertain, the OECD said in its latest report.
At present "a decline in global activity and the strength of the Swiss franc are restraining exports, though domestic demand, particularly consumption and construction investment, is holding firm," the OECD said.
The Swiss economy contracted 0.1% in the second quarter, and the economics ministry is due to release third-quarter GDP data on Thursday
The Swiss National Bank imposed a floor of CHF1.20 per euro in September last year and cut interest rates to head off the risks of recession and deflation, and the OECD said the central bank should persist with its zero interest-rate policy.
"Deflationary pressures remain, although Swiss consumer prices have been rising of late, driven by higher prices for fuel, but core inflation remains negative, reflecting the impact of the strong franc," it said.
The OECD expects Swiss consumer prices this year to decline 0.6%, in line with the SNB's projections, and increase 0.1% in 2013.
The boom in the Swiss housing market, driven largely by record-low mortgage rates and demand from cash-rich immigrants, remains a concern, the OECD said.
"Although there are some signs of a loss of momentum, mortgage lending and Swiss house prices continue to increase strongly, and targeted measures to slow credit growth should be envisaged," it said.