Swiss to avoid recession this year: Credit Suisse

Despite the negative impact of the strong franc, Switzerland should be able to avoid a recession this year “thanks to the robust situation of the global economy,” Credit Suisse said in a report issued on Tuesday.

Swiss to avoid recession this year: Credit Suisse
Photo: Credit Suisse

However, the bank in its Monitor Switzerland report for the first quarter of 2015 warned that strong growth momentum is not expected this year — “a year of stagnation” — or in 2016.

The report, from Claude Maurer, an economic researcher for Credit Suisse, predicts 0.8 percent growth in the Swiss economy, following two percent growth last year.

The franc has appreciated in value about ten percent since January when the Swiss National Bank abandoned its policy of pegging the Swiss currency to the euro at a rate of 1.20 francs per euro.

The stronger franc is hurting Swiss exporters by making their products more expensive to customers in the eurozone, Switzerland’s biggest market for goods and services.

But Credit Suisse said it considers a “recession to be unlikely”.

It said a “super cycle” fed by immigration, the real estate boom, low inflation and low interest rates” continues to underpin consumer spending.

The super cycle “continues to turn, even if more slowly than before”.

The bank said economic recovery in Europe in the US are offsetting the negative effects from the loss of competitiveness in the export sector.

Unemployment insurance, meanwhile is acting as an “automatic stabilizer” and an economic safety net, while the central bank stands ready to intervene if the Swiss franc appreciates in value too much, the report said.

However, the export sector will suffer for some time to come, impacting expected growth in 2016 of 1.2 percent, which is below-average growth for Switzerland.

For more on the report, check here.

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Swiss central bank announces big rate hike in inflation fight

The Swiss National Bank (SNB) raises the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

Swiss central bank announces big rate hike in inflation fight

“The rate change applies from tomorrow, September 23rd 2022”, SNB said in a press release on Thursday.

It added that “inflation [in Switzerland] rose to 3.5 percent in August and is likely to remain at an elevated level for the time being”.

The latest rise in inflation is principally due to higher prices for goods, especially energy and food, according to the bank.

The SNB’s forecast for the evolution of inflation is, however, positive.

It forecasts that the rate will drop to 2.4 percent in 2023 and and 1.7 percent for 2024.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher”, the bank said.

In mid-June, the SNB tightened interest rates by half a percentage point for the first time in 15  years. Since then, inflation in Switzerland has continued to rise. For August 2022, the statisticians reported inflation of 3.5 percent, after 3.4 percent in June and July.