06/12/2011
With the strong Swiss Franc, the European debt crisis and the struggling world economy the Swiss economy is facing three braking factors. economiesuisse expects the Swiss gross domestic product (GDP) to merely grow by 0.5 per cent in 2012, while the unemployment rate might rise to 3.6 per cent. Especially export industries, but also their suppliers and tourism are under pressure. Overcoming the EU debt crisis presents a challenge for Switzerland as well.
2011 has turned out to be a year of challenges for the Swiss economy. But these challenges will become even bigger in 2012. The pressure, stemming particularly from the still strong Franc exchange rate, leads to an accelerated transformation process in many industry sectors. The therewith associated measures, for example the increased import of advance performances, the shift of jobs or hiring stops, will have direct impact on economic dynamics in Switzerland. Not only export companies, but also national suppliers, the retail industry and to a profound extent the tourism sector are hit.
Further negative factors, such as the weakening global economy and the massive debt crisis in numerous EU states, will put Switzerland at the brink of a recession. economiesuisse estimates that in 2012 the Eurozone is entering into a period of economic stagnation and political problems will not be solved rapidly either. The consequences of all these negative effects on Switzerland have been clearly noticeable since last summer. Indeed the Swiss GDP increase about two per cent in 2011 – but this growth occurred mostly in the first half year.
Regressive exports, strong construction sector
The list of sectors, which count on negative growth rates in 2012, is long. Especially the classic export sectors like the metal, machine, textile, nutrition and paper industry have to deal with regression of added value. The austerity measures of many industrialised states have also become noticeable in the chemical-pharmaceutical industry. The upcoming year will be particularly hard for tourism as economiesuisse’ chief economist Rudolf Minsch states: “The swift appreciation of the Franc this summer has also found international resonance and it has regiven Switzerland the image of a high price country.” The domestic touristic added value in 2012 is clearly going to be regressive. However, the forecasts for insurance business, consulting, transport and IT are more positive.
economiesuisse predicts a real GDP growth of 0.5 per cent for the upcoming year. The economic growth is mostly being supported by the domestic market, even as many suppliers first have to adapt to the new circumstances. A continuously solid growth in 2012 is expected from civil engineering. Immigration and slightly higher real wages cause further increase of private consumption. Latter profits from an overall low inflation rate. Cheaper imports and domestic economic dynamics could lead to an even negative inflation in 2012. Despite dull outlooks there is a persisting demand for well qualified workforce in Switzerland. Despite layoffs employees find jobs quickly. Therefore, economiesuisse does not foresee a drastic increase of unemployment numbers: The business federation forecasts an average rate of 3.6 per cent for 2012.
EU debt crisis also a challenge for Switzerland
The EU member states and the Eurozone were hit particularly hard by the debt crisis. Since the EU is the most important business partner of Switzerland, we have to follow the development in the Eurozone very closely. Switzerland has a great interest in the EU getting a grip on its massive structural financial misbalances. The debt crisis is not over at all though. Pascal Gentinetta, Chairman of the Board of economiesuisse, raises concerns: “No matter what financial structure the EU chooses in the end, the great uncertainty, whether the involved governments are capable of implementing the necessary reforms and saving proposals to the needed extent, remains.”
With that said Switzerland does not hesitate to act. Internationally it already makes an important contribution to calm the situation through its engagement with the International Monetary Fund. In addition the Swiss national bank holds 150 billion Euros of currency reserves. Therefore it is to refrain from a direct participation in the saving institutions of the EU. The impact on the bilateral way between Switzerland and the EU is difficult to judge. Among very tense circumstances, one hopes that the for both parties proven and stable relations will not bear unnecessary political stress
Futher information:
Press release (with data)