Growth forecasts revised downward

A person turns off the heating.

(26.10.2022) The Swiss economy is likely to escape recession despite the economic turmoil. According to the KOF Swiss Economic Institute, gross domestic product (GDP) growth is expected to reach 2.3% in 2022 and 1% in 2023, before returning to normal at 1.7% in 2024.

The energy crisis and supply difficulties have accelerated inflation and slowed down purchasing power, even in Switzerland. This situation has led to fears of a recession in developed countries, but Switzerland should not be affected. The KOF, which in 2021 was forecasting growth of 3.4% in 2022 and 1.8% in 2023, has nevertheless revised these forecasts significantly downward.

The situation could become even more critical in the event of a total suspension of natural gas supplies to the EU countries by Russia. Such a scenario - considered unlikely but nevertheless envisaged by the KOF - would seriously hamper the generation of value added this winter. The Swiss GDP growth rate could thus fall to 2.1% in 2022 and to -0.4% the following year, i.e. a decrease of 1.4 percentage points compared to the baseline scenario for 2023.

If the energy crisis does not worsen, the KOF expects nominal wages to rise sharply by 2.1% in 2022 and 2.7% in 2023, which should mitigate the decline in purchasing power caused by the increase in consumer prices. Domestic consumption will therefore become one of the pillars of the Swiss economy in the next two half-years. In addition, the KOF expects inflation to slow down in the medium term, which should ease the pressure on prices and drive the inflation rate below 2% by the end of 2023.


Last modification 26.10.2022

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