2021.09.1608:09:00UTC+00Swiss Economic Recovery To Lose Momentum Temporarily: SECO

The Swiss economy is expected to expand at a faster pace next year after losing the momentum temporarily this year, the State Secretariat for Economic Affairs, or SECO, said in its Autumn forecast, released Thursday.

Gross domestic product is forecast to grow 3.4 percent this year, down from the previous outlook of 3.8 percent, the report showed. Nonetheless, the economic activity is likely to have exceeded pre-crisis levels during the summer, the SECO noted.

The expert group of SECO expects recovery in the short-term to be somewhat less dynamic. The agency observed that sectors such as international tourism are likely to emerge from the crisis more hesitantly.

The downward revision also reflects the fact that the slump in 2020 was not quite as severe, meaning the catch-up potential was also lower overall.

The projection for 2022 was upgraded to 3.6 percent from 3.5 percent as domestic demand and foreign trade will pick up with growth momentum in the global economy.

Driven in particular by catch-up effects in consumer spending and investment, and also by considerable growth in exports, the Swiss economy is set to grow significantly faster than the historical average in the coming quarters, the SECO said.

The agency raised its inflation outlook for this year to 0.5 percent from 0.4 percent and that for next year to 0.8 percent from 0.5 percent.

The ongoing recovery is having a clear impact on the labor market. Short-time working can now gradually be reduced, and unemployment is expected to fall sharply, the SECO said.

The experts forecast an annual average unemployment rate of 3.0 percent for 2021, with a further decline to an annual average of 2.7 percent in 2022.