2019.03.2710:25:00UTC+00KOF Slashes Swiss Growth Forecast

Switzerland's economic growth is set to slow sharply this year, thanks to the slowdown in the country's key export markets, the KOF Swiss Economic Institute said Wednesday.

The KOF slashed the Swiss growth forecast for this year to 1 percent from 1.6 percent seen in December. GDP Growth was 2.5 percent in 2018.

The growth projection for 2020 was retained at 2.1 percent.

"Exports of goods are likely to be sluggish in the first half of 2019 and are not expected to pick up until the second half of the year," the KOF said. "The slowdown in the global economy is also acting as a drag on demand from foreign tourism."

The KOF expects construction investment to stagnate this year and house building to fall by 3 percent, primarily owing to an oversupply which has caused vacancy rates to rise. Consumer spending was forecast to grow a modest 0.8 percent this year.

Real wage growth is expected to remain modest this year and next.

The think tank said the Swiss National Bank is unlikely to raise its key interest rates before the ECB, and hence, rates in Switzerland will probably remain at their present levels for at least another year.

The current exchange rate was also expected to remain unchanged at 1.13 francs to the euro over the forecast horizon.