UBS: Switzerland’s economy expected to grow in last quarter

10-16-2009 06:08

UBS AG, Europe’s second-largest bank, revealed today the results of the Quarterly Business Cycle Indicator survey, which showed that the economy of Switzerland has left the recession behind and is likely to grow in the last quarter of this year. The survey indicated that economic growth will return in the Swiss economy.

Growth in last quarter

The results are based on a survey, held in September among 350 firms in Switzerland, and climbed to 0.2%. UBS AG stated: “It suggests that the fourth quarter will result in a modest expansion in the yearly comparison, implicating that Switzerland has found its path out of recession.” The bank’s economists estimate that the Swiss economy will expand 7.1% in 2010. “Confidence among Swiss companies regarding the future is rising, which proves the estimations that the economy will rise moderately in the last quarter of 2009,” the bank commented. “The economic slump seems to vanish and the economy becomes more stable, despite the modest growth.”

Upward trend will continue

The indicator shows that the pressure regarding international and domestic new orders, earnings, output and revenues weakened in the third quarter. Swiss companies believe that the upward trend will continue. Nevertheless, employment figures do not correspond with the economic situation, the bank’s economists said. The layoff trend will probably continue for a period of time.

Damage recovered

Export-based segments, inclusive electrical engineering, metal sectors and machinery, climbed in the period ended 30 September and are likely to advance in the last quarter of this year. UBS stated that the economic recession yet has to affect other parts of the economy, while the financial services and export-based segments indicate that they have recovered from the damage.

Swiss watch industry

Today’s figures demonstrate that the recession in the watch industry will persist in the last quarter of this year, with sales and earnings improving modestly and the pace of decreasing new orders weakening. “There are no indications that the Swiss watch industry has bottomed out,” the economists commented. They forecast a higher unemployment level in 2010 in comparison to the jobless rate in 2009. Furthermore, the economists expect the consumer sentiment to moderate while the construction segment will decrease. “For this reason, 2010 may appear more pessimistic than the growth forecast would indicate, as the outlook is boosted by the basis effect.”