Switzerland's KOF economic institute cut its growth forecasts for 2012 and 2013 on Friday, citing a spillover from the global economic slowdown, but still sees the pace of growth accelerating over the course of next year.
The revision for growth this year down to 0.9 percent brings the KOF's forecast in line with those of the government and central bank.
Continue Reading Below
"Due to the slowdown in global economic growth over the summer period and the weaker-than-expected Swiss growth in spring, Swiss GDP will in 2012 only grow by 0.9 percent," KOF said.
The Swiss economy, which long seemed able to withstand the turmoil in the neighboring euro zone, unexpectedly contracted in the second quarter. The economic slowdown justifies the Swiss National Bank's policy of maintaining the cap it imposed on the Swiss franc against the euro a year ago to ward off deflation and a possible recession. =eci>
The institute, which publishes the monthly leading KOF economic barometer , cut its 2012 growth view by 0.3 percentage points from its prior forecast. =eci>
It sees growth of 1.3 percent in 2013, down from its previous forecast of 1.7 percent, with the recovery still hampered by weak export markets and slowing construction activity while employment is also likely to remain weak.
The Swiss government in September cut its growth forecast for this year to 1 percent from 1.4 percent previously. Similarly, the Swiss National Bank (SNB) in September slashed its 2012 growth forecast to 1 percent from 1.5 percent.
The Swiss economy grew 1.9 percent last year.
Echoing the SNB, KOF welcomed the European Central Bank's plan to buy euro zone government bonds and a German constitutional court ruling allowing the plan to go ahead, but said gross domestic product in the European Union was likely to contract in 2012 while the U.S. economy was expected to slow.
"Due to the policy of muddling through, uncertainties regarding the future of the euro persist which are in turn hampering companies' willingness to invest," KOF said.
(Reporting by Andrew Thompson; Editing by Susan Fenton)