ZURICH (Reuters) – The Swiss government lifted its economic growth forecast for 2018 on Wednesday and left unchanged its projection for 2019, but it warned of risks to the outlook even as the country enjoyed strong growth above its long-term average.
The State Secretariat for Economic Affairs (SECO) said it expected economic growth of 2.9 percent in 2018, higher than the 2.4 percent level it had expected in its June forecast.
But it left unchanged its outlook for 2019 growth, highlighting risks to the global economy such as trade disputes between the United States and other economies, as well as political uncertainties in Europe.
“The favourable international economic development is stimulating foreign trade, and companies are investing heavily,” the government said in its statement.
“The forecast for GDP growth in 2019 remains unchanged at robust 2.0 percent. However, the negative risks significantly outweigh the positives and threaten the global outlook.”
Both figures were above Switzerland’s long-term average economic growth of 1.7 percent.
The nation’s economy has been in rude health this year, with a booming manufacturing sector and strong exports helping lift second quarter annual growth to 3.4 percent – the fastest pace in eight years.
The Swiss economy has also received a temporary boost from international sporting events like the Winter Olympics and the soccer World Cup, as the organising bodies are based in Switzerland and their revenue are allocated to the country’s GDP.
The government on Wednesday said it expected exports to continue providing a substantial boost to growth, with the second half underpinned by investment linked to construction and factory production.
However, the government cautioned that declining momentum in the global economy may dampen trade next year.
Political risks in Europe and elsewhere, including uncertainties over the Italian government’s plans and post-Brexit relations between the European Union and Britain, could see rising safe-haven pressure on the Swiss franc.
Economists at Credit Suisse earlier this week increased their Swiss growth forecast to 2.7 percent in 2018 from 2.2 percent previously, highlighting the strong start to the year.
Still, the bank expects growth to slow to 1.7 percent in 2019, due to exports being hampered by a stronger Swiss franc.
(Reporting by John Revill and Brenna Hughes Neghaiwi; Editing by Maria Sheahan & Shri Navaratnam)