Despite the threat of a global economic slowdown, the chief economist at Credit Suisse has predicted that Switzerland will avoid a recession in 2023. The Swiss bank said that private consumption and a strong labour market should keep the economy growing in the coming months.

Switzerland should avoid a recession in 2023

Speaking to Blick, chief economist Claude Maurer said that “the situation remains positive for Switzerland” and that “a recession should be avoided” in the coming year. He explained that despite cost hikes on fuel and the prospect of energy shortages this winter, a solid labour market and high spending from Swiss families and individuals will prop up the economy and help the country avoid a downturn.

In its latest forecast, Credit Suisse predicted that gross domestic product (GDP) will grow by 2,5 percent by the end of 2022, helped along by increases in the private consumption of goods (4 percent) and exports by Swiss international companies (4,5 percent). While recessions have been forecast for the European Union and other nations around the world in the next year, Credit Suisse predicted that GDP growth in Switzerland would only slow to 1 percent in 2023.

Inflation to slow as Swiss National Bank raises interest rates

The bank predicted that this economic growth would be accompanied by less inflation, falling from 2,9 percent at the end of 2022 to 1,5 percent in 2023. “Hydrocarbon prices have reached their peak. Gasoline and heating oil prices should begin to fall,” Maurer noted, explaining that even if inflation is high now, a 1 percent inflation rate rise in Switzerland only corresponds to a 0,11 to 0,13 percent drop in household spending, meaning the economy can cope for now.

However, to prevent inflation from rising further, the bank called on the Swiss National Bank to raise interest rates, although not to the extent planned by the European Central Bank and US Federal Reserve. The monetary policies of the bank in Bern have been hailed by economists in the past, with some saying the franc is now worth its weight in gold as a hedge against inflation.