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UBS raises growth forecast for Switzerland
UBS has raised its 2010 growth forecast for Switzerland from 2.0% to 2.5%. The favorable economic situation is expected to lead to a decline in the unemployment rate, but also to increasing inflationary pressure, rising interest rates as well as a strengthening of the Swiss franc.
The positive economic data in recent months suggests that the Swiss economy is recovering from the crisis faster than previously expected. UBS is therefore increasing its 2010 growth forecast for Switzerland from 2.0% to 2.5%. It is also decreasing its forecast for unemployment. The unemployment rate is likely to be at 4.2% on average in 2010 (previously: 4.9%).
The economic recovery is primarily driven by the very dynamic domestic sector: the stabilization of the labor market and sustained immigration continue to drive considerable growth in consumer spending. Net exports and equipment investments are also expected to contribute to economic growth.
Due to solid economic growth and rising oil prices, UBS is also increasing its 2010 inflation forecast from 0.6% to 1.3%. The Swiss National Bank (SNB) will soon be encouraged to tighten monetary policy by its concerns about the consequences of low interest rates for the real estate market and by the growing inflationary pressure. UBS expects the SNB to raise interest rates in September, a few months before the European Central Bank. This single-handed move by the SNB may lead to the further strengthening of the Swiss franc against the euro.
Caesar Lack, Economic Research Switzerland
Tel. +41 44 234 44 13
Carla Duss, Economic Research Switzerland
Tel. +41 44 234 21 19
UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research