Switzerland revises growth estimate down to 1.6%
The return on Swiss federal bonds should break even this year, compared to negative yield of 0.4% from 2016, the State Secretariat for Economic Affairs estimated on Tuesday. The ministry, known for its acronym SECO, said in its quarterly report that next year the gauge should strengthen to 0.2%. The government's expert group took the expected economic growth rate for 2017 to 1.6% from 1.8% reported three months ago, with stronger personal consumption more than offset by weaker growth in government spending, construction investment, imports and exports. The forecast for next year remained at 1.9%. Expansion in 2016 was 1.3%.
The consumer price index, which lost 0.4% last year, is expected to jump 0.5% in 2017, after in the prior update the estimate was slashed to zero. SECO sees inflation at 0.3% in the year after that, slightly higher than in the previous report. The real, trade-weighted exchange rate of the franc is expected to dip 1.6% next year after declines of 0.5% and 2% this year and in 2016, respectively. The forecast for unemployment wasn't changed.
The document pinpoints uncertainty related to fiscal measures in the United States, the presidential election in France, and Britain's exit from the European Union as some of the main risks. "Possible protectionist measures would hit export-oriented countries, while GDP growth in the USA could benefit from fiscal policy stimulus, although the ongoing normalization of monetary policy could curb this growth," the ministry said.