KOF hikes forecast Swiss economy – Swiss Franc up on risk aversion

KOF hikes forecast Swiss economy – Swiss Franc up on risk aversion

12-20-2009 08:56

The Swiss Institute for Business Cycle Research (KOF) hiked the outlook for the Swiss economy for this year and next year. Switzerland’s economy will contract by 2.9% in 2009, according to the latest forecast, while the Zurich-based think-tank forecasted a 3.4% shrink in September. The research institute estimated that the economic slump would end in the last two quarters of 2009. It raised the economic growth estimation for 2010 from 0.1% tot 0.6%.

KOF’s outlook

Switzerland’s gross domestic product will rise by approximately 1.5% in 2011, the Swiss research institute reported. In 2011, joblessness will be at 4.8%.
While private consumption will still be on the rise in 2010, the rate of increase will slow down. The KOF estimates a stronger rise in private consumption for 2011.
Price pressure is expected to remain weak, according to the Zurich-based research institute.
The central bank of Switzerland will use its leeway to maintain the current interest rates, at least until mid-2010. The Swiss think-tank estimates a weak inflation level of 0.6% for next year, while inflation will rise moderately in 2011.

Economic growth

The State Secretariat for Economic Affairs (SECO) raised the economic growth estimation from 0.4% to 0.7%, December 15. The gross domestic product is forecasted to fall by 1.6% in 2009, in comparison to the estimated 1.7% drop in September, according to experts.

Swiss Franc

Risk aversion provided the safe-haven Swiss Franc support today, as it rose against various currencies, falling below less than 1.50 against the Common European Currency, which was the first time since March.
The Swiss National Bank (SNB) did not intervened despite the strong Swiss Franc, in contrast with the previous time when it traded below 1.50 versus Europe’s Single Common Currency, which resulted in another week of gloomy prospects for the Euro.