Switzerland Country Profile - Economy, Currency, Central Bank, Canadian Dollar, CAD

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Introduction

Switzerland is the 36th largest economy, with a GDP of $388 million in 2006, and a population of 7.5 million people. With its lon-term monetary security, stability, and bank secrecy, Switzerland is a destination for assets that are seeking a "safe haven." The economy is increasingly dependant on foreign investment and money flows. The country's small size and highly skilled labor force make industry and trade the central part of the economy. With its location in the heart of Europe, the Euro-zone is the country's most important trading partner. The economy also currently has a low interest rate (2.75%), which makes the Swiss Franc a funding currency for carry trade.

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Switzerland's Fundamental Indicators and Chart

Monthly Data for January, 2008

Date	EST	Indicator	Actual	Forecast	Previous
1/3	3:30am	SVME PMI	61.3	61.5	63.4
		For December Output remained steady as backlog of orders and purchase quantities declined. The Index for Manufacturing sector activity is still well above the 50 mark although it showed a slight deceleration in December.
1/4	1:45am	Consumer Price Index m/m	0.2%	0.1%	0.5%
		For December. CPI y/y: 2.0%, forecast 1.8%, pr. 1.8% Release from Swiss Federal Statistics Office Swiss CPI exceeded expectations. The 2% annual inflation for December was the highest since October of 1995. Nearly all categories rose, but prices were mainly driven by higher energy prices, which tend to drive other prices up as well.
1/7	1:45am	Unemployment Rate	2.6%	2.6%	2.6%
		Seasonally adjusted rate for December. Unadjusted Rate: 2.8%, forecast 2.8%, pr. 2.7% (Sept) The unadjusted unemployment rate increased to 2.8%, in line with expectations. The seasonally adjusted rate remained the same as November, at 2.6%.
1/17	5:00am	ZEW Expectations	-32.7		-29.7
		For January
1/21	3:15am	Producer and Import Prices	-0.1%	0.2%	0.3%
		For December. PPI y/y: 3.0%, forecast 3.2%, pr. 3.2% (Nov) Release by Swiss Federal Statistics Office (FSO) As crude oil prices receded slightly in December, producer inflation eased temporarily. We already know now that crude oil prices rebounded to record high levels in January and gives this release a lot less significance.
1/22	3:15am	Retail Sales y/y	2.9%	4.0%	2.2%
		Adjusted Annual rate for November From the Swiss Federal Statistics Office Retail sales rose less than expected in November, although at a robust pace. SNB board member Thomas Jordan noted that slowing in global economies will increase downside risks for the Swiss economy. Despite a less optimistic outlook on exports, consumption is expected to hold up as the outlook on the labor market is strong going into 2008.
1/29	2:15am	Trade Balance	0.20B	0.95B	1.89B
		For December in Swiss Francs
1/29	4:00am	UBS Consumption Indicator	2.200		2.203 2.131
		For December Media Release from UBS "The UBS Consumption Indicator remained stable in December. At 2.20, it was again well above the long-term average and thus continues to signal robust growth in Swiss private consumption. At its current level, the UBS Consumption Indicator signals that Swiss consumer spending remains healthy. The improved situation in the labor market has led to a sharp rise in employment. Real wages too may very well rise further this year. Both have a positive impact on disposable household income and should fuel consumer spending in the coming months. Overall, UBS expects real growth in private consumption to reach 2.2% in 2008."
1/30	5:30am	Leading Index	1.70	1.95	1.84 1.99
		For January Press Release from Swiss Institute for Business Cycle Research "With a value of 1.70 in January 2008, the barometer has slipped for the first time following a prolonged sideways movement. The value of the barometer for January 2008 came in at 1.70. This represents a decline relative to the figure for December 2007. Prior to this, the barometer spent several months broadly at a level of 2.00. The barometer is signalling that the rate of gross domestic product growth for the previous year is set to remain positive. It is likely to be the case, however, that growth will slow in the 1st half of 2008."

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Central Bank Watch - Latest Swiss National Bank Decision

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November
20th, 2008

Actual

Forecast

Revised Form

1.00%

2.00%

N/A

Provided by: Swiss National Bank
Official Release: Statement

In a surprise unscheduled move the Swiss National Bank slashed interest rates by a record 100 basis points. The central bank has become more concerned over the economic outlook, and does not feel restrained by inflation fears. The move may also be a reaction to a fresh round of stock losses that have again rattled confidence in financial markets around the world. It was the third unscheduled move by the SNB since the beginning of October when rates were 2.75%. This also means that the bank will most likely not move on rates next month in its scheduled meeting, but instead give an assessment of the economy, though that is dependent on conditions in the banking sector.

From the Release: "The Swiss National Bank (SNB) is lowering the three-month Libor target range by 100 basis points to 0.5–1.5% with immediate effect. It will provide the Swiss franc money market with a generous and flexible supply of liquidity in order to bring the Libor down to the middle of the target range.

As a result of the decline in the prices of raw materials and oil, price stability will be restored sooner than expected, and inflation is likely to fall below 2% as early as the end of this year. Moreover, international economic conditions have worsened appreciably, bringing a higher risk of a marked slowdown in economic activity in Switzerland next year. By lowering the Libor target range by 100 basis points, the SNB is making use of its room for manoeuvre."

Go to SWZ Interest Rate Fundamental Indicator Page