SWISS 1988 INFLATION SEEN AT TWO PCT - INSTITUTE
Swiss inflation is likely to rise in 1987
and 1988 because of inflationary tendencies in the domestic
economy, the Centre for Economic Research of the Federal
Institute of Technology said in its spring review.
    It forecast a rise in consumer prices of two pct in 1988
compared with 1.3 pct in 1987. Low import prices in 1986 helped
to keep annual inflation down to 0.8 pct.
    The centre said that in general the outlook for the Swiss
economy in 1987 and 1988 remained favourable, despite the more
difficult international economic climate facing export
industry.
    The centre repeated its previous forecast that growth in
Swiss domestic product would slow to 2.2 pct in 1987 from 2.5
pct in 1986. It revised its forecast for 1988 GDP growth to 1.7
pct from 1.6 pct in its last autumn review.
    Domestic demand will continue to replace exports as the
motor of economic growth. Private consumption will grow by
three pct in 1987 and two pct in 1988 against 3.75 pct in 1986.
    Growth in goods exports will slow to 1.75 pct in 1987 from
2.1 pct in 1986 but pick up slightly to 2.5 pct in 1988. All
three figures are well below the Swiss average for recent
years. In 1985, for example, exports increased by 9.1 pct.
    The centre said the strength of the Swiss franc, which has
firmed sharply in recent months, would continue to put pressure
on Swiss exporters.
    It forecast that imports of goods would grow by a more
modest 4.5 pct in 1987 and 3.25 pct in 1988 than in 1986, when
import prices fell substantially and imports rose by 8.2 pct.
    Industrial production will grow by 1.6 pct in 1987 and 1.2
pct in 1988 compared with 4.2 pct in 1986.
 REUTER
