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Strong Swiss franc takes its toll

Zurich/Basel Media Releases Switzerland


Economic growth in Switzerland has slowed considerably, as confirmed by the quarterly UBS Consumption Indicator. Although the strong franc is seriously impacting the margins of exporters, the robust domestic economy and continued demand from emerging markets should prevent a drift into recession.

UBS outlook Switzerland 4th quarter 2011

The UBS Business Cycle Indicator, based on the results of a survey of industrial companies, shows a clear slowdown in Swiss economic growth in the second half of 2011. After the indicator reached a record high in the third quarter of 2010 with an index level of 3.3, it has fallen steadily since and manifests GDP growth of 1.4 percent for the third quarter 2011. Growth of 1 percent is expected for the final quarter of the year.

In industry, the economic situation deteriorated significantly in the third quarter. New orders from abroad slipped into negative territory for the first time since the first quarter of last year, while domestic demand for industrial goods stagnated. Sales remained flat even though production levels rose further. The resulting decline in sales prices led to lower revenues. Although the service sector tends to suffer less from the strong Swiss franc than industrial companies, it too was more adversely affected than in the previous quarters, with a decrease in earnings and export revenues falling for the first time following five stable quarters.

The Swiss economy has grown more rapidly over the past few years than the economies of most other Western industrialized countries due to the opening of the labor market and the fact that Switzerland avoided any debt excesses prior to the crisis. In the coming year, the solid domestic economy, especially consumption, is likely to help the Swiss economy to outperform most of its peers and compensate for potential losses suffered on the export side. Exporters will continue to benefit, however, from high demand from the emerging markets, so that UBS economists expect overall that Switzerland will not slide into recession.

The latest issue of UBS outlook Switzerland publishes detailed information on the survey results by UBS Wealth Management Research. The quarterly publication focuses on the strong Swiss franc. WMR economists and analysts show how the franc impacts the economy and discuss options for hedging risks. The issue also contains an analysis of the Swiss real estate market and the results of the annual wage survey, which was conducted this fall.

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

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

Sibille Duss, Wealth Management Research
Tel. +41 44 235 69 54

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

UBS outlook Switzerland:

UBS publications and projections for Switzerland: /


In developing the WMR forecasts, WMR economists work 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.


UBS Business Cycle Indicator and gross domestic product
(Change yoy in %)

The UBS Business Cycle Indicator: a barometer of the Swiss economy since 1975
Since 1975, UBS has conducted quarterly surveys of companies operating in Switzerland concerning their business outlook. UBS economists have drawn upon this data to develop an economic indicator designed to provide reliable forecasting of the outlook for the Swiss economy. The following survey elements flow into the calculation of the economic indicator: change in total incoming orders versus the previous quarter, projected change in orders for the next quarter, change in domestic and international incoming orders, production, finished goods inventories, staffing levels and order backlog.