May 31, 2022 05:25AM ET
By: AnalysisWatch
Switzerland's economic recovery is expected to be muted this year as higher inflation, a war in Ukraine and new blockades in China slow the post-pandemic economic recovery, which grew 0.4% in the first quarter, the government said Tuesday.
Rising prices are negatively affecting many European economies as they reduce the disposable income of households, who are forced to spend more on fuel and food.
The shutdown of parts of China to combat new outbreaks of the coronavirus is making it harder for companies to get key components and is closing off parts of the country's huge domestic market.
"There is still a lot of uncertainty, which has increased, especially in China," said Ronald Indergand, an economist with the State Secretariat for Economic Affairs (SECO).
"It is very possible that we will see slower growth abroad and in Switzerland this year than in our last forecast," he told Reuters.
"But we will still see significant GDP growth," he added. "I don't think a recession is imminent because the recovery from the pandemic is not yet complete."
SECO will submit its latest forecast on June 15, after predicting a 2.8% expansion in March, although Indergand declined to comment on any downward revisions.
He said there is still room for strong recovery effects, particularly in areas such as the hotel and transport sectors, which he expects to see in the second and third quarters of this year.
The economy grew 0.4 percent in the first quarter of 2022 thanks to a strong rebound in manufacturing, driven by a recovery in international demand, particularly for precision instruments, watches and jewelry.
Excluding sporting events, GDP grew 0.5 percent in the quarter.
On an annual basis, the economy grew 4.2 percent in January-March, up from 3.6 percent in the fourth quarter of 2021.