Despite the slowdown in foreign demand in late 2004 and the rise in oil prices in the second half of 2005, the Swiss economy is expected to grow by 1.25% in 2005, which is close to potential.
Activity should accelerate in 2006, as the recovery in Europe gathers strength, prompting an improvement on the employment front without generating inflationary pressures.In the absence of tension on prices, maintaining accommodating monetary conditions in the short term will be appropriate until the recovery is firmly established. Control over public expenditure needs to be reinforced, however, particularly in the area of social spending, if fiscal consolidation is to be ensured on a sustainable basis. The recent series of measures directed to bolstering competition needs to be pursued in order to stimulate productivity growth.
| Population (000s), 2004 | 7 391 |
| Area (000 sq km) | 41 |
| Currency | Franc |
| GDP (Billion USD), 2004 | 357.4 |
| Life expectancy at birth (Women, Men), 2002 | 83.0, 77.8 |
| Total labour force (000s), 2004 | 4 368 |
| Government type | Federal Republic |
| Indicators | % change unless otherwise indicated |
|---|
| 2005 | 2006 | 2007 |
|---|
| GDP growth | 1.2 | 1.7 | 1.8 |
| Consumer price index | 1.2 | 1.2 | 0.8 |
| Short-term interest rate | 0.7 | 1.4 | 2.0 |
| Unemployment rate (%) | 4.1 | 3.9 | 3.4 |
| General government financial balance (% GDP) | -1.6 | -1.2 | -0.8 |
| Current account balance (% GDP) | 13.2 | 13.5 | 13.6 |
Source: OECD©
OECD Observer, No. 252/253, November 2005
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