Swiss economy: Low inflation is still a concern for Bern
|A week after the SNB kept rates unchanged, the State Secretariat for Economic Affairs in Bern has issued economic forecasts for Switzerland. The GDP growth in 2018 is expected to reach 1.9% y/y (currently at 0.9%). In the same time, the SECO is forecasting exports to reach 3.7% (currently below 3%). Imports are also expected to take a jump to 3.8%. Consumer prices forecasts are the one weak point and the SECO sees consumer prices declining by 0.3% a year from now.
The strong franc has not prevented the SECO from showing its optimism on the Swiss economy. We tend to believe that current levels are still sustainable for the Helvetic country. In the same time, FX reserves are reaching almost CHF 700 billion which shows the massive effort to stabilise the CHF. We do not believe that the central bank will diminish its intervention and the balance sheet is set to stay very large.
Stay on top of the markets with Swissquote’s News & Analysis
Upside pressures on the CHF will likely continue. The currency is very dependent on the ECB monetary policy. In the medium-term, markets seem to expect the ECB to provide some hints about a further tightening path, which would provide some relief to the currency. For the time being, we remain long CHF.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.