Swiss cut 2012 growth forecast as currency strengthens

14th June 2011, Comments 0 comments

The Swiss government on Tuesday cut its growth forecast for 2012, saying the strengthening Swiss franc has brought new risks.

"The expert group forecasts GDP growth of 2.1 percent for 2011 and 1.5 percent for 2012," said the economy ministry.

The ministry had earlier predicted that gross domestic product would expand 2.1 percent in 2011 and 1.9 percent in 2012.

"In spite of some early signs of slowdown, economic growth in Switzerland has been solid so far this year," said the ministry.

"However, the currency appreciation, which already represented a burden on Swiss exports during the last few months, has jumped even higher over the last few weeks."

The franc is now trading an an all-time high, and the ministry said it did not expect the currency to fall "in the short run."

This could further hurt the competitiveness of Swiss exporters.

"The expert group assumes that the demand for safe currencies will remain high. An additional strong pressure on the Swiss franc would however jeopardise economic growth to a serious degree," added the ministry.

© 2011 AFP

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