Swiss institute first to see economy shrinking in 2009
Reuters
Published Oct 29, 2008 07:19AM ET
ZURICH, Oct 29 (Reuters) - The Swiss economy is set to shrink for the first time since 2003 next year as slowdown in foreign demand spreads to the domestic economy, one of Switzerland's leading research institutes said on Wednesday.
"The Swiss economy will slip into a recession in the first quarter of 2009 and will shrink by 0.6 percent in the full-year, posting its worst performance since 1991," the Crea institute at the University of Lausanne said.
The Crea is the first institute to forecast a decline in real gross domestic product in 2009, following expected growth of 1.9 percent in 2008, though other research institutes and bank analysts have slashed their growth forecasts.
The KOF Swiss economic institute sees growth slowing to a mere 0.3 percent in 2009, also forecasting a brief recession around the turn of the year.
Swiss economy minister Doris Leuthard said in a recent newspaper interview that growth was likely to be below 1 percent next year.
The Swiss economy has weathered the global credit crisis better than other countries so far, but export growth is slowing sharply and the banking sector has been hit hard.
In a separate release, the KOF said its latest survey showed that the mood in the banking sector had worsened significantly in October and banks planned to cut jobs in the coming months.
The Crea said exporters were the main victims of the global slowdown, especially as the Swiss franc was rising sharply.
Swiss consumption would slow soon as unemployment should rise quickly, the Crea said, forecasting a rise of the unemployment rate to 3.5 percent in 2009 and 4.3 percent in 2010 from the current level of 2.5 percent.
The institute said the recovery in 2010 was likely to be modest, with growth only picking up to 0.5 percent. (Reporting by Sven Egenter; Editing by Victoria Main)
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