Swiss economy: growth could be affected by rising world tensions

Switzerland is currently experiencing an “increasingly broad-based upswing,” with a government report Tuesday sticking to its forecast that the economy will grow by 2.4 percent in 2018.

Statistics from the federal government’s State Secretariat for Economic Affairs (SECO) indicated that the positive trend applied to Switzerland’s economy on a domestic as well as on an international level.

The booming global economy combined with favourable exchange rates are increasing demand for Swiss growth and companies can “look to the future with confidence”.

“Industrial companies are continuing to look to the future with confidence and are anticipating robust growth, including in international business,” said the report.

The report, however, cautioned that certain global economic risks have increased since the last forecast in December.

“The trade dispute between the U.S. and key trade partners has escalated to new heights after the implementation of tariffs on steel and aluminum imports,” said SECO, noting that the European Union has been brought into the spat.

“If the situation were to deteriorate further and trigger a trade war between the major economic areas, this would significantly curb global trade, Swiss exports and, ultimately, economic growth in the medium term,” said the report.

Currently, however, the booming global economy combined with favorable exchange rates are increasing demand for Swiss growth.

For 2019, SECO predicts that the Swiss economy’s growth will drop to 2 percent, largely because the global economy is expected to lose momentum after a sustained period of strong growth.

Another risk factor identified by the report is deepening political uncertainty in Italy, which could have ripple effects through the financial market and could create “considerable upward pressure” for the Swiss franc.

The report noted that adjustments to this year’s forecast are still possible, with the Swiss economy either performing worse, or better than currently predicted.