Energy risks and inflation caused cuts in Switzerland's growth forecasts

The growing risks connected with the "tight energy situation and the sharp rise in prices" have greatly influenced the opinion of the Switzerland government. Now the forecast for economic growth is decreased.

With this forecast, the state Secretariat of Economic Affairs (SECO) expects the economy to grow at 2,0% this year, rather than the 2,6% forecast in June. And in 2023, it predicts that the economy will grow by 1.1%, compared to the previous expectation of 1.9% growth.

"After a positive first half of 2022, the perspective of the Switzerland economy is getting worse," SECO said. "The tight energy situation and sharp price increases are negatively affecting the economic prospects, especially in Europe".

SECO's expectations for inflation have increased. Previously, consumer prices were predicted to rise by 2.5% in 2022, but now 3% is expected. The inflation forecast for 2023 was 1.4% growth, but now it is expected to grow by 2.3%.

According to SECO, the expected unemployment rate in Switzerland this year is 2.2%, and next year - 2.3%. This beneficial unemployment situation will continue to support domestic demand.

Earlier, it was expected that the demand for Switzerland's products from the eurozone, the U.S. and China would be higher. The forecast now suggests a weakening of international demand.

Central banks around the world are fighting against inflation by increasing interest rates. For SECO, they have also complicated the situations of the global debt and financial markets.