2017.03.2907:36:00UTC+00Swiss KOF Cuts 2017 Growth Projection

Switzerland's economy is forecast to grow at a slightly slower pace this year, the KOF Economic Institute said in its Spring Forecast on Wednesday.

The think tank projected 1.5 percent growth this year, instead of 1.6 percent estimated in December. For 2018, GDP was expected to climb 1.9 percent, unchanged from prior projection.

The upward pressure on the Swiss franc is persisting, the think tank said. Recently, the CHF/EUR exchange has been fluctuating between 1.06 and 1.08. In its current forecast, KOF expects the rate to level out at 1.07 CHF/EUR.

Growth in employment is likely to be comparably low and registered unemployment is forecast to remain at the current high level, the agency said. KOF expects a slight increase in the ILO jobless rate to 4.7 percent in 2018 from 4.6 percent this year.

The think tank expects an increase in consumer prices to 0.3 percent in 2017, owing to a slight rise in petroleum product prices compared to the previous year and a temporary hike in fresh product prices.

Further, KOF noted that low interest rates in the euro area are still preventing a reduction of negative short-term interest rates in Switzerland. Hence, the latter are not expected to go up before the end of the forecast period in 2018.