Switzerland's economy is projected to grow by 1.2 percent this year, the KOF institute said in its summer forecast, released Friday. The estimate is better than the prior forecast of 0.8 percent.

While public spending is forecast to grow relatively slowly this year, private consumption would grow by 2 percent this year and 1.8 percent in 2013, the institute said.

However, investment growth in construction and machinery and equipment will ease off this year. Meanwhile, inventory is set to contribute positively to GDP growth in 2012.

The KOF expects exports to grow merely by 2.3 percent in the current year, before accelerating to 3.5 percent in 2013. At the same time, import of goods will gain pace in the course of this year and will increase by 4.4 percent.

The think tank sees positive development in the labor market. The jobless rate is seen rising slightly to 3.2 percent by the end of 2013 from 3.1 percent this year.

RTTNews