KOF institute sees Swiss cbank raising rates in 2011

* KOF institute sees exports growing 3.2 pct in 2011

* Asian demand rise seen offsetting lower European demand

* KOF sees unemployment rate falling further to 3.3 pct

ZURICH, Dec 17 (BestGrowthStock) – The Swiss economy is seen growing
1.9 percent next year, when the central bank is also expected to
undertake its first interest rate hike since the global
financial crisis, Switzerland’s main economic research institute
said.

The Zurich-based KOF institute, which also publishes a
monthly economic barometer, on Friday revised its quarterly view
up from an earlier forecast of 1.8 percent.

Growth would be underpinned by higher private consumption,
investment in construction and machinery, and exports, it said.

“The KOF assumes that the Swiss National Bank (SNB) will
raise interest rates slightly in mid-2011. Evidence for a housing
bubble has not intensified,” it said in a statement.

Real estate prices in Zurich and Geneva have risen strongly
and the SNB has warned banks of lax lending standards.

“In addition, the Swiss franc is under continuous upward
pressure as a result of fiscal problems within the euro area,”
the KOF also said. “Therefore, it can be expected that the SNB
will not speed up its return to a normal monetary policy.”

On Thursday, the SNB, which forecasts growth of around 1.5
percent for 2011, kept its benchmark interest rate ultra low
despite the economy’s brisk recovery as the euro zone debt
crisis has pushed up the franc and hit exporters.
[ID:nLDE6BF0HE]

The SNB’s benchmark has been at a rock-bottom 0.25 percent
since March 2009.

The KOF, which expects the unemployment rate to ease further
to 3.3 percent, said exports were expected to rise by 3.2
percent overall in 2011 despite the strong franc.

“Asian economies are expected to continue to grow robustly
thereby at least partly counterbalancing decreased demand in
Europe and America,” it said.

The euro zone is Switzerland’s biggest trading partner and
the safe-haven Swiss franc has risen some 14 percent against the
euro so far this year.

(Reporting by Catherine Bosley; Editing by Ruth Pitchford)

KOF institute sees Swiss cbank raising rates in 2011