Swiss economy 'booming' but faces headwinds: report

GENEVA - A latest Swiss government economic forecast described the economy as "booming", but also issued a caution due to "negative risks for the global economy" that have intensified.

The report released by the Swiss government, the Federal Council, this week predicted higher-than-expected growth in 2018 as exchange rates improve and unemployment falls, while global trade uncertainties abound and there is political uncertainty in Europe.

"GDP (gross domestic product) has risen rapidly over several quarters, employment is on the up and unemployment is falling," said the report.

"Industry has enjoyed particularly strong growth, with capacity utilization now at a level not seen since 2011 and order books continuing to look well filled," the report said.

It noted the rapid rise of GDP in recent quarters and the persistent fall in unemployment numbers, so the group revised their prediction for economic growth for 2018 up from 2.4 percent to 2.9 percent.

It said that reports from the service sector also indicate that business is doing very well overall in the Alpine country and due to high international demand, Swiss companies are increasingly expanding their production capacities.

The forecast for GDP growth in 2019 remains unchanged at a healthy 2.0 percent.

"However, the negative risks significantly outweigh the positives and threaten the global outlook," said the report.

It said that as well as key negative risks for the global economy intensifying over the recent months, new ones have arisen and that the international economy could slow down faster than assumed in the forecast.

"This would be most likely if the trade disputes between the US and other major economic areas were to escalate further," said the report.

It said global trade overall and Swiss foreign trade would be severely affected and companies in Switzerland could end up cutting back on their investments.

Citing European political uncertainty, the report said the lack of clarity on the Italian government's plans is causing great uncertainty.

"It also remains unclear what the relationship between the EU and UK will look like once Brexit comes into force in late March 2019," it said regarding Britain's impending departure as a member of the European Union.