Swiss GDP shrinks in fourth quarter

3rd March 2009, Comments 0 comments

Switzerland nears recession as a lead banker calls the outlook “bleak”.

ZURICH - Switzerland's gross domestic product shrank 1.9 percent during the fourth quarter, the country's top central banker revealed Monday, describing the short-term outlook for the economy as "bleak".

"The Swiss economy recorded solid growth in 2008. However, on closer examination, economic growth retreated in the course of the year," Jean-Pierre Roth, president of the Swiss National Bank's governing board, said in a speech to be delivered in Frankfurt.

The Swiss economy expanded by 1.3 percent in the first and second quarters but the growth slowed to 0.1 percent in the third.

The country is technically on the brink of recession, after its first negative growth reported for the last three months of 2008.

A recession is defined as two successive quarters of negative growth, and was forecast by Swiss economists.

According to the speech given at the Swiss-German Economic Club in Frankfurt, Roth said his short-term forecast for the real economy was "bleak".

"Together with those in the rest of Europe, the Swiss economy will shrink in 2009," he said.

He noted that private and state consumption would support the economy, but investment and businesses would continue to decline amid the global economy crisis, leading to more job losses.

Swiss unemployment reached 3.3 percent in January, the highest since 2007.

Bank Pictet economist Bernard Lambert noted that while Switzerland fared better than the eurozone so far, it is now "clearly in recession and the first quarter would also be negative."

However, the economic boom in preceding years would act as a "buffer" against the current slowdown, he said.

The Swiss Economy Ministry is scheduled to publish its official data for the fourth quarter on Tuesday.

AFP / Expatica

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