Economic researchers at ETH Zurich (KOF) continue to forecast a significant downturn in the Swiss economy in the coming year. Above all, the energy crisis is a burden on the economy.
Compared to the fall forecast, KOF did not change its overall economic picture and hardly revised its forecast. According to a statement released Thursday, the risk of energy shortages and an associated economic recession has decreased since the fall.
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Switzerland is slipping into a per capita recession
According to its latest forecast, KOF expects real GDP to decline to 0.7% in 2023 after growing by 2.0% in the current year. A significantly higher growth of 2.1 percent is then expected for 2024. Both values have not been revised compared to previous forecasts.
Without the influence of major sporting events, which are known to affect domestic GDP, projected growth rates are 1.0% (2023) and 1.7% (2024).
The low point in the economic trend is likely to be in the current winter half year. According to the KOF, a decline in total economic production is expected in some countries this winter or the first half of 2023. The Swiss economy will not be able to completely escape from this. Although it should be able to avoid stagnation thanks to its relatively high level of elasticity, the level of production is likely to slow down.
As is well known, inflation in Switzerland has fallen again somewhat recently due to lower oil prices. At around 3 percent, it is well below the rate of inflation in other European countries, but well above the inflation target of the Swiss National Bank (SNB), according to the KOF.
Regulated energy prices will be raised in the first quarter of 2023, which will lead to more inflationary pressures. The end of the underlying effects would then lead to lower inflation through 2023. After 2.9% in 2022, the KOF expects annual inflation of 2.3% in 2023 and 1.1% in 2024. The values for 2023 and 2024 have been slightly lifted compared to the fall forecast.