Business group urges changes to spur growth

The Swiss economy will see modest growth of 0.7 percent in 2010, according to predictions from economiesuisse, the business lobby group, which is urging the government to make policy changes to help companies deal with continuing lean times.

The group’s forecast, issued on Monday, calls for a turnaround for Switzerland’s exporting companies with 3.8 percent growth in sales expected next year.

However, it said this will be offset by negative growth in private consumption and in domestic business, as unemployment averages 4.9 percent for the year, up from the four percent recorded last month.

The construction sector is among those expected to face difficulties in 2010, according to the forecast.

With 2009 expected to show growth of minus two percent, the year has been an “annus horribilis” for the economy, in particular for the export sector, Rudolf Minsch, chief economist for economiesuisse, said in a press release.

Machine, textile, metal and plastics industries were particularly hard hit. By contrast food processing and pharmaceutical sectors fared better, as well as medical technology companies that were less affected by the economic slowdown.

Overall, the Swiss economy still performed better than many other industrialized countries, economiesuisse noted.

But the group, representing 30,000 businesses with 1.5 million employees, said businesses will continue to face challenges in the year ahead and it issued a list of actions it wants the government to address.

Gerold Bührer, president of economiesuisse, called for rigorous growth policies to stimulate the economy by removing obstacles to investment, pursuing the opening of new markets and guaranteeing the soundness of future financial policies.

“We must concentrate on the growth factors from the perspective of a market economy,” Bührer said in a statement.

He said the federal government’s policies were currently insufficient to aid the economy. Economiesuisse is critical, in particular, of the high debt from government social programmes, and it is lobbying for tax relief for businesses.

The organization called for the “consolidation” of trade agreements with the European Union, while urging free trade agreements under discussion with India, China and Russia as a priority.

Among other things, it also advocated a “competitive” market for the provision of electricity that is respectful of the environment as well as climate change policies that are “acceptable for the economy and coordinated at the international level.”

Economiesuisse’s prediction for the economy compares with widely differing forecasts from other agencies. UBS expects a rebound of 1.7 percent, while the federal government’s economic secretariat (Seco) predicted 0.4 percent growth in its most recent forecast in September.

Most other economists expect modest growth, although the Créa Institute, attached to the University of Lausanne, last month predicted that Switzerland would remain in recession with negative growth of 0.4 percent.

Créa’s forecast is based on the unemployment rate rising to 5.5 percent by the end of the year.

Economiesuisse acknowledged that the Swiss economy’s expected fragile recovery faces several risks, including future currency rates.  A strong franc could jeopardize results from export companies, the organization said.

Another factor that could hurt the Swiss economy is the possibility of a speculative bubble re-emerging as a result of excessive liquidity in the global financial system, it said.

Also, “the stability of the international financial system is not yet guaranteed.”

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