Despite last year's global economic slowdown, Switzerland was never at risk of slipping into recession. Weak exports were fully compensated by strong growth in the domestic market. UBS forecasts economic growth of 1.3 percent for Switzerland for the current year and 1.7 percent for 2013. By contrast, the Eurozone economy is likely to contract this year and is expected to grow only marginally next year. Although inflation is expected to fall in Switzerland this year, in the long term the extremely expansive monetary policy could cause inflation to pass the 2 percent mark. The labor market is seeing remarkably positive growth.

The UBS currency experts do not expect the euro to gain significantly against the Swiss franc this year or next. The national bank is likely to remain committed to the exchange rate floor owing to the continuing economic crisis in Europe. UBS expects interest rates to remain low this year and next. Longer-term interest rates could rise over the coming 24 months, although this rise is likely to be subject to fluctuation. According to the real estate experts at UBS CIO Wealth Management Research, there is a risk that property prices could continue to rise for some years yet. Price corrections are therefore expected to take all the longer.

The special feature of the quarterly publication is "New and innovative companies." Some 12,000 companies are established in Switzerland each year, creating around 17,000 new jobs. However, only half of these companies manage to survive for more than five years. Nevertheless, new companies are a key factor for the Swiss economy.

The supplement provided with UBS outlook Switzerland includes an assessment by our analysts of the equity and bond markets in Switzerland.

In developing the UBS CIO WM Research economic forecasts, UBS CIO WM Research economists worked in collaboration with economists employed by UBS Investment Research. Forecasts and estimates are current only as of the date of this publication and may change without notice.

Media contact

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

Caesar Lack, UBS CIO WM Research
Tel. +41-44-234 44 13

Sibille Duss, UBS CIO WM Research
Tel. +41-44-235 69 54

Stefan R. Meyer, UBS CIO WM Research
Tel. +41-44-235 38 26

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

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