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Swiss Recovery To Outpace Europe

by Ulrika Lomas, Tax-News.com, Brussels

17 March 2010


Economic conditions in Switzerland have improved significantly quarter-on-quarter and prospects for 2010 are more positive than those for the Euro zone, according to statistics released by the Swiss government.

Due to strong economic performance in the final quarter of 2009, and the first of 2010, the authorities have revised upward the GDP growth estimate for the full year, to 1.4% from 0.7% -- indicating a stronger recovery in Switzerland than will be experienced by the Euro zone. However, a continued strong resurgence from the downturn will be dependent on the strength of growth internationally, particularly in Europe (where GDP growth is projected at 1% in 2010) and in the United States (projected to be 2.5-3%).

The government’s report on Swiss economic performance states:

“Economic recovery in Switzerland has continued to stabilize in Q4 of 2009. Apart from a strong GDP growth, exports continued to rebound at a solid pace and domestic demand remained robust. As a consequence, the economic development in Switzerland in late 2009 - as along the way during the recession - was above-average on the European scale. In early 2010, short-term indicators (business and consumer climate) have continued to improve. Despite the positive recent developments, the economic perspectives for the Swiss economy are, however, not unclouded.”

“First and foremost, it is the fragile and high-risk condition of the global economy which could turn out to be a stumbling block for strong growth of Swiss exports. Moreover, the domestic demand which has so far been quite vivid will probably lose momentum. For this reason, the Expert Group only expects a stabilization in employment for this year, and another slight increase in unemployment which will reach 4.3%."

”A stronger-than-expected revival of global trade could have another favorable effect on the general mood, with positive impacts on investment, employment and private consumption. This could in turn lead to a more robust economic recovery both world-wide and in Switzerland. Such a positive development would certainly also bring about the turnaround on the Swiss labour market sooner than anticipated.”

The report concludes:

”On the other hand, important risks are still looming which could jeopardize a continued recovery. The global economic aftermath of the international financial crisis, in particular - namely in many countries the sky-rocketing national indebtedness and possibly a permanently oversensitive banking sector represent major imponderables for economic development in Switzerland in the coming years."

TAGS: tax | economics | gross domestic product (GDP) | international financial centres (IFC) | unemployment | Switzerland

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