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Country Report Switzerland

Publication Date June 2008
Publisher EIU
Product Type Report
Pages 21
ISBN Number not applicable
Product Code EIU00004
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Summary

Outlook for 2008-09

  • Political business will be more unsettled in the forecast period, at least at first, as the Swiss People's Party (SVP) adapts to opposition politics—the first instance for a major party since 1959.
  • The SVP national leadership is pursuing the ejection from the party of one of its members, Eveline Widmer-Schlumpf, who accepted a government position against the SVP's wishes. This could lead to a splintering of the party.
  • The government will retain two SVP members, alongside SP, CVP and FDP members. Competition policy, social security reform, energy and EU relations will be the main focus.
  • The government is forecast to continue on its path of fiscal consolidation and to post fiscal surpluses. The debt brake mechanism is to be amended to incorporate off-budget expenditure.
  • GDP growth hit peaks of 3.2% in 2006 and 3.1% in 2007, driven by exports and private consumption, but is expected to fall to 1.9% in 2008 and 1.7% in 2009.
  • The Swiss National Bank (SNB, the central bank) is forecast to keep official interest rates at or close to 3% over the forecast period.
  • The Economist Intelligence Unit expects inflation to fall during 2008 from 2.9% in May, giving an annual average of 2.4% in 2008 and 1.8% in 2009.

Monthly review

  • The Swiss electorate has rejected a people's initiative that would have tightened the requirements for acquiring Swiss citizenship. The initiative had been championed by the SVP.
  • Swiss voters delivered a further clear rejection of another people's initiative that had sought to remove government ministers from the campaigns leading up to referendums.
  • The SVP has expelled the whole Graubunden cantonal section from the party for supporting Eveline Widmer-Schlumpf, who joined the government against the SVP's wishes.
  • First-quarter budgetary data show that the federal public finances are on a favourable course for 2008. The general government surplus was 2.2% of GDP in 2007, a particularly strong result, following 1.9% of GDP in 2006.
  • GDP growth lost momentum in the first quarter of 2008, and leading indicators continue to suggest a further weakening throughout the year.
  • Seasonally adjusted unemployment rose in April for the first time in nearly eight years, increasing from 2.54% to 2.55%, possibly marking the bottom of the unemployment cycle.

Content

  • Highlights
  • Outlook for 2008-09: Domestic politics
  • Outlook for 2008-09: International relations
  • Outlook for 2008-09: Policy trends
  • Outlook for 2008-09: Fiscal policy
  • Outlook for 2008-09: Monetary policy
  • Outlook for 2008-09: International assumptions
  • Outlook for 2008-09: Economic growth
  • Outlook for 2008-09: Inflation
  • Outlook for 2008-09: Exchange rates
  • Outlook for 2008-09: External sector
  • Outlook for 2008-09: Forecast summary
  • The political scene: Swiss People's Party is defeated on naturalisation
  • The political scene: Muzzling the government is subject to a national vote
  • The political scene: Houses of parliament diverge on free movement of labour
  • The political scene: Campaign against Eveline Widmer-Schlumpf continues
  • Economic policy: First-quarter data suggest favourable 2008 federal budget
  • Economic policy: Outcome of 2007 federal budget was well above plan
  • Economic policy: General government budget surplus is 2.2% of GDP in 2007
  • Economic policy: Cantons' improved budgets provide scope for tax cuts
  • Economic performance: Growth loses momentum in the first quarter of 2008
  • Economic performance: Unemployment rises for the first time since December 2003
  • Data and charts: Annual data and forecast
  • Data and charts: Quarterly data
  • Data and charts: Monthly data
  • Data and charts: Annual trends charts
  • Data and charts: Monthly trends charts
  • Political structure

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