Swiss growth is dependent on developments in the situation in Ukraine. Forecasts for Gross Domestic Product (GDP) by KOF economists range between 2.9% in the most optimistic scenario, and 1% in the event of an escalation of the conflict.
For its spring economic forecasts, the economic studies center of the Swiss Federal Institute of Technology Zurich (ETH Zurich), KOF, put two scenarios on the table, a response to the significant political uncertainties relating to the war in Ukraine, indicates he Wednesday.
The first scenario assumes that military violence will end soon and that the economic consequences will be limited in time. The second incorporates an escalation of the conflict and sanctions by Western countries and their allies, which would lead to a global recession.
In their most pessimistic scenario, in the event that Russian energy and raw materials exports are completely halted, they imagine that the adjusted growth of sporting events could be reduced to 1%, two percentage points below forecasts. of the most optimistic scenario.
Indeed, such a situation would lead to a sharp rise in energy prices and production restrictions in Europe, which would have a negative impact on demand for Swiss products abroad, starting in the second quarter. The franc could also come under strong upward pressure as unemployment rises. In 2023, growth forecasts would be reduced to 0.8%.
On the contrary, if the war in Ukraine were soon to end, annual GDP would be up 2.9% excluding sporting events this year. Purely theoretically, this indicator would have increased by 3.2% this year if Russia had not attacked Ukraine.
In this more optimistic scenario, the conflict would weigh on the world economy only in the second quarter, even if certain sanctions against Russia would persist beyond that. Trade relations between Switzerland and the two warring countries are not significant, so the impact of sanctions is limited, although some companies suffer significant consequences.
In 2023, GDP would be expected to rise by 2.3%, a significantly lower growth than in 2022 as the post-pandemic catch-up effects will have ended.
Differentiated impact on inflation
While the war has already caused a sharp rise in energy prices, the two scenarios presented affect inflation differently. On the optimistic side, it is expected at 1.6% in 2022 and 0.8% in 2023 while in a more unfavorable situation, it could reach 2.8% this year and 1.2% next year, note the economists .
War is not the only sword of Damocles hanging over the global economy, with the pandemic continuing to loom large in the backdrop. The risk of appearance of new variants and the duration of the immunity of the Swiss population against those in circulation remain open questions and risk making the forecasts too optimistic.
This article has been published automatically. Source: ats/awp