Swiss economy unlikely to avoid renewed recession: Capital Economics
2013-03-15 15:04:47
With demand from the Eurozone weakening further, the Swiss economy is unlikely to avoid a renewed recession in the first quarter, despite the central bank's commitment to maintain its supportive monetary stance, Capital Economics Senior European Economist Jennifer McKeown said Friday.
According to the firm, the Swiss National Bank will be forced to act on its commitment to take further monetary policy measures to ease deflation risks and support growth, given the bleak economic outlook and the strength of the franc.
The economist noted that the performance of the Swiss economy this year would be considerably worse than that projected by the central bank, given the strengthening of the franc which is much too high for exporters' comfort.
A further likely contraction of the Eurozone economy - the largest market for Swiss exports - could result in the Swiss economy stagnating this year, in contrast to the central bank's forecast for growth in the 1-1.5 percent range. However, the Swiss economy is seen growing modestly by 1 percent next year, the economist noted.
The central bank on Thursday kept its key interest unchanged at close to zero, and retained the exchange rate ceiling.
Recently, the bank had said it would impose capital controls such as charges on offshore deposits above and beyond those already imposed by some commercial banks, but ruled bringing interest rates to sub-zero levels.