Swiss economy walks a tightrope
|There are reasons for optimism and for pessimism. On the plus side, GDP grew 3.2% in Q2, well above its recent average. But growth seems to be slowing, and the risks of a trade war are weighing on exports. According to Swiss National Bank President Thomas Jordan, a trade war would have a strong impact on the Swiss economy, while the risk of monetary policy mistakes would rise. SNB returns have whipsawed: Q3 saw a loss on foreign currency investments of CHF 12.94 billion, down from a record profit of CHF 33.7 billion in Q3 2017.
Switzerland’s economic outlook remains driven by the development in trade and the mounting debt pile of the SNB, estimated at CHF 700 billion. Switzerland’s safe haven status might prove to be a burden in the coming quarters. For now, inflation continues to advance slightly in October (CPI +1.10% annually and +0.20% monthly). Since the beginning of the 2018, the CHF appreciated by 2.92% and 2.47% against USD and EUR respectively, putting pressure on exporting industry margins and thus putting manufacturing activities downward.
After reaching a 15-month low in the beginning of September of 1.12, the EUR/CHF is bouncing back, approaching the 1.1430 range short-term.
Stay on top of the markets with Swissquote’s News & Analysis
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.