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Strong franc weakens export profit margins

Zurich / Basel | | Media Releases Switzerland

The strong franc is starting to impact Swiss exports. The UBS quarterly survey shows that profits are stagnating, even though industry sales have risen. Nevertheless, the UBS economic indicator projects gross domestic product growth of 2.7 percent for the first quarter of 2011.

The quarterly survey conducted by UBS Research Switzerland confirms that industrial sales and production increased during the first quarter, while earnings stagnated. Both domestic and foreign order intake improved slightly. This was surprising considering the strength of the franc, particularly with regard to orders from abroad. It suggests that companies are accepting cuts in their profit margins, owing to the strong franc, in order to maintain sales.

The UBS economic indicator, calculated on the basis of the survey conducted among industrial enterprises, points towards a slight slow-down in economic growth during the first half of the year. Nonetheless economic growth is expected to remain high for 2011. The 2.7 percent growth rate forecast by UBS Economic Research Switzerland is well above the long-term average of 1.6 percent.
The UBS economic indicator and the detailed survey results on a range of industrial and service sectors are published in the latest edition of UBS outlook Switzerland.

Lack of skilled workers – how Switzerland is bridging the gap
In the April edition of the quarterly publication, UBS economists focus specifically on the shortage of skilled workers in Switzerland and the question of how the lack of highly qualified employees can be rectified. Besides foreign workers, well-qualified retirees could also help bridge this gap. A transparent and modular education and training system could also help satisfy the demand for skilled personnel.

New feature: equity and bond recommendations
UBS outlook Switzerland features the supplement "Investing in Switzerland" for the first time. It provides analyst recommendations on equities and bonds. In this edition, UBS Research Switzerland recommends investing in equities and short-term corporate bonds.

Finally, the latest edition of UBS outlook Switzerland also features in-depth assessments of the business cycle, the currency and interest situation and the property markets.

Contacts:

Daniel Kalt, Chief Economist Switzerland
Tel. +41 44 234 25 60

Caesar Lack, UBS Research Switzerland
Tel. +41 44 234 44 13

Sibille Duss, UBS Research Switzerland
Tel. +41 44 235 69 54

Stefan R. Meyer, UBS Research Switzerland
Tel. +41 44 235 38 26

UBS publications and forecasts for Switzerland:
www.ubs.com/economicresearch
www.ubs.com/wmr-swiss-research

UBS growth forecasts

The UBS economic indicator