ZURICH: A dynamic and open Swiss economy has weathered a strong franc with little impact, the Organisation for Economic Cooperation and Development said on Tuesday, but it warned that curbs on immigration pose bigger challenges ahead.
Immigration accounts for much of the nation of 8.2 million's traditionally robust economic growth, the economic think tank for developed countries said in its latest survey of Switzerland, adding that restrictions could undermine the growth model and had already weakened confidence.
"Switzerland has long benefited from a strong inflow of foreign workers," the OECD said. "Restrictions on this inflow mean that policy will need to focus on improving productivity performance."
This in turn would require more flexibility in the labour and product markets, including better child care to promote women in the work force; agricultural reforms; and increased competition in the telecoms and energy sectors, the OECD said.
It recommended more efficient public spending and expanding Switzerland's network of free-trade agreements to include countries like the United States and India.
The report did not give projections for 2017, the year by which the government must impose entry quotas under a binding referendum against mass immigration held in February 2014.
The OECD forecast 0.7 percent economic growth for 2015 and 1.1 percent growth for next year.
The report gave its stamp of approval to the monetary policy of the Swiss National Bank, which abandoned what it called an unsustainable currency ceiling against the euro in January and cut the sight deposit rate to -0.75 percent to dissuade flight into the safe-haven currency.
"Given the long period of very low or negative inflation, such expansionary policy is appropriate," the OECD wrote.
Nonetheless, the central bank would need to reassess rates as unintended consequences such as struggling pension funds and rising real estate investments emerge.
"The SNB should evaluate how low interest rates can go and for how long," the OECD wrote.
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