FRANKFURT (MNI) – The Swiss National Bank (SNB) said it expects
economic growth to come to a halt in the second half of the year.
Switzerland’s central bank said in its quarterly report published
Friday, that economic activity in Switzerland is suffering from the
effects of a strong Swiss franc and softer international demand.
It forecast GDP growth of 1.5% to 2.0% for 2011 as a consequence of
favourable economic development in the first half of the year. Without
the stabilizing effect of its policy to impose an exchange rate ceiling
on the franc, there would be a substantial threat of recession, the SNB
said.
The bank said that uncertainty about the future outlook for the
global economy remains exceptionally high and the risks for the global
financial system have increased substantially.
“The deterioration in the outlook for growth and fiscal problems in
the advanced economies are both adversely impacting confidence in
financial markets worldwide,” it said.
The SNB’s inflation forecast has shifted substantially downwards as
a result of the massive appreciation in the Swiss franc and the
deterioration in the outlook for the global economy.
For 2011, the SNB said the forecast shows an inflation rate of
0.4%, for 2012 a rate of -0.3% and for 2013 a rate of 0.5%. It said this
forecast is based on the assumption of a three-month Libor of 0.0% and a
further weakening in the Swiss franc.
“In the foreseeable future, there is no risk of inflation in
Switzerland. There are, however, downside risks for price stability
should the Swiss franc not weaken further,” the SNB reported.
–Frankfurt Bureau 069 720 142; email: frankfurt@marketnews.com
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