Economic outlook remains gloomy despite improvement
Published: Wednesday, Dec 27th 2023, 10:30
Updated At: Wednesday, Dec 27th 2023, 10:30
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Financial analysts are slightly less negative about the economic outlook for the Swiss economy than they were a month ago. Overall, however, the corresponding index remains negative.
The UBS CFA indicator published by UBS rose by 5.9 points to -23.7 points in December, according to a statement on Wednesday. This is the 22nd time in a row that the value has been in the red.
A negative value indicates that the survey participants are cautious about economic growth in Switzerland over the next six months or expect the economy to weaken. Three quarters of all respondents described the current economic situation as "normal".
Expectations have also become more optimistic with regard to the development of inflation. The proportion of analysts who expect a slowdown in inflation over the next six months has risen by more than ten percentage points.
Significantly more survey participants now also believe that short-term interest rates will fall over this period. Financial analysts are increasingly assuming that the Swiss National Bank (SNB) will lower its key interest rate in the first half of 2024, writes UBS.
Stable exchange rate expected
Respondents expect little movement in the development of exchange rates. Almost 60% of survey participants forecast a stable exchange rate between the local currency and the euro. According to UBS, this is the highest number since April 2021. With regard to the US dollar against the franc, just over half of analysts expect a sideways trend. The current values are a good 0.94 and 0.85 francs per euro and US dollar respectively.
This month's survey also asked about long-term expectations (5 years) for inflation and economic growth. The expected inflation rate in five years is now seen at 1.4 percent after 1.7 percent just three months ago. According to UBS, this is the lowest figure in two years.
The long-term forecast for Swiss GDP growth - the average annual real GDP growth rate over the next three to five years - was 1.6% in December, slightly lower than in September (1.7%).
The survey took place between December 14 and 18, with 38 analysts taking part.
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