Switzerland flag
Switzerland flag

The further strengthening of the Swiss franc could push Switzerland into a short recession this year, leading economists at the Swiss Federal Institute of Technology (ETH) Zurich said Wednesday.

Switzerland flag
Switzerland flag

The experts predicted that gross domestic product (GDP) would shrink by 0.5 per cent this year.

Before the Swiss central bank gave up its costly policy of defending a minimum rate of 1.20 francs to the euro in mid-January, ETH Zurich had forecast a growth of 1.9 per cent, about the same as last year.

“Exports are expected to fall significantly over the first half of the current year,” the researchers said.

The strong franc has gained 20 per cent in value as a result of the central bank’s move and now trades at parity with the euro, making Swiss export products more expensive in the eurozone.

Investments at Swiss factories would fall as a result, the forecasters said.

Switzerland’s important tourism sector was also seen as suffering from the stronger Swiss currency.

In addition, the experts said that the drop in oil prices would hurt earnings in the international oil trade, which is largely carried out via Switzerland.

They forecast that the size of the gross domestic product would stagnate in 2016.

Besides ETH Zurich and the bank UBS, which now predicts 0.5-per-cent growth for 2015, none of the other Swiss institutions that provide GDP forecasts have issued new assessments following the end of the minimum rate.
GNA

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