ZURICH, Feb 6 - The Swiss government raised its official forecast for 2004 economic growth to 1.8 percent from 1.5 percent and said on Friday it expected growth in 2005 to quicken to 2.3 percent in line with a global rebound. The State Secretariat for Economic Affairs cut its 2003 gross domestic product estimate to a contraction of 0.4 percent from the 0.3 percent decline it had predicted in October. It kept its forecast for consumer price inflation in 2004 at 0.6 percent and said it expected 1.0 percent in 2005 as inflationary pressure remains tame despite the economic upturn that can start tapping unused capacity for more output. Swiss consumer prices edged 0.3 percent lower in January from December as clothing and shoe costs tumbled during the traditional post-Christmas clearout of stock. The year-on-year inflation rate remained subdued, rising just 0.2 percent. That is well below the two percent ceiling that the Swiss National Bank equates with price stability, allowing the central bank to keep its benchmark interest rate target near zero while it monitors the strength of the recovery.
The SNB has said that it saw no risk of deflation, even if there were some months of negative price development. Switzerland's export-dependent economy started to pull away from a double-dip recession in the third quarter of 2003 as demand from key European markets picked up, but doubts have lingered over when the domestic sector would start to improve. While the headline jobless rate is stuck at five-year highs, the seasonally adjusted rate has started to fall, suggesting the worst could be over. Trade data have also suggested domestic demand was recovering as imports rose 15 percent in December.//