Swiss economic growth will decelerate this year and next but still remain robust, the OECD said in a report on the country. The OECD said Swiss GDP growth to slow to 2.7 pct this year and 2.1 pct next year, from 3.2 pct in 2006. This represents an upward revision from the OECD's previous forecast for 2007. In its May economic outlook the organisation forecast 2007 growth of 2.1 pct. The 2008 forecast has been trimmed slightly from a previous forecast of 2.2 pct. "While economic growth is projected to decelerate somewhat, it is expected to remain above its potential rate, given the favourable conjuncture foreseen in European trading partner economies," the OECD said. The organisation puts the economy's potential growth rate at around 2 pct. The Swiss National Bank may therefore need to raise interest rates further, but it should adopt a cautious approach to further tightening, the OECD said. The SNB has raised its target for interbank rates by 2 percentage points in total since Dec 2005, most recently lifting the target to 2.25-3.25 pct in September. Inflation pressures could increase further if the Swiss franc continues its downward trend, it said. But immigration has increased labour supply and kept inflation low, and the economic impact of the recent turbulence in global financial markets remains uncertain, arguing for a cautious approach to interest rate hikes, it said. "Overall, these conditions warrant a slow paced and flexible approach to monetary tightening, in particular to allow the expansion of aggregate supply to be absorbed, even with the current robust activity," it said. The OECD said one significant risk to the growth outlook is the possibility of an unwinding of the carry trade, in which investors have borrowed in low-yielding currencies such as the Swiss franc to invest in higher-yielding assets elsewhere. If the carry trade unwinds, this could lead to a significant appreciation in the Swiss franc's exchange rate, it said.