© Reuters. People walk near lake Leamn and the jet d’eau water fountain in Geneva, Switzerland, November 12, 2019. REUTERS/Denis Balibouse/File Photo
ZURICH (Reuters) -The Swiss economy will grow at a tepid rate in 2024, the government said on Tuesday, maintaining its earlier forecast for 1.1% growth this year albeit with a lower outlook for inflation.
The government now expects Swiss inflation to decline to 1.5% this year, down from 2.1% in 2023 and below its December 1.9% forecast.
For next year, the State Secretariat for Economic Affairs (SECO) also kept its earlier forecast growth would pick up to 1.7%, when adjusted for sporting events, getting closer to the long-term average of 1.8%.
In 2025, Swiss consumer prices are expected to increase by 1.1%, the same rate as foreseen in December.
“Numerous indicators currently suggest that Swiss economic growth will remain moderate in the near future,” SECO said, citing stagnation in the eurozone, Switzerland’s biggest export market.
“Overall, Switzerland expects global demand to remain below its historical average until the end of 2025.”
Significant risks remained, SECO added, citing conflicts in Ukraine and the Middle East, which could lead to higher commodity prices. If interest rates remained higher for longer, that could dampen global demand, it said.
Developments in Germany and China were also highlighted as key factors for the Swiss economy.
With its broad range of industries, including a strong pharmaceutical sector, Switzerland has shown resilience in recent months as other countries, such as neighbouring Germany have seen growth stall.
SECO forecast a gradual recovery in the global and European economy in 2024, which it said it would boost Swiss exports and investments.
The Organisation for Economic Cooperation and Development (OECD) last week forecast the Swiss economy would grow by 0.9% this year and 1.4% in 2025.
Swiss industry has called on the Swiss National Bank to help them deal with a strong Swiss franc, which is compounding weak demand by making their products more expensive abroad.
The SNB will also update its economic outlook when it announces its latest interest rates decision on Thursday.
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