KOF Upgrades Swiss Growth Forecast

Switzerland's economic growth will likely accelerate at a faster rate than estimated earlier, supported by stable domestic demand and an improvement in exports as the Eurozone recovery strengthens, revised estimates released by the KOF Economic Institute showed Monday.

The agency forecasts that gross domestic product will grow at a faster rate of 1.9 percent this year than 1 percent in 2012. The revised outlook marks an improvement from the 1.4 percent gain the the firm had predicted earlier.

Further, growth is expected to accelerate to 2.1 percent next year, slightly faster than the 2 percent estimated earlier. Going ahead, growth is seen gathering further momentum, and the economy will expand 2.3 percent in 2015.

According to KOF, an upturn in Switzerland's exports will contribute significantly to the economy in the coming months, shifting the dynamics of growth from domestic demand towards foreign demand. The firms expects Swiss exports to rise 4.2 on average in 2014.

Consumer prices will likely drop further by 0.2 percent this year, but will reverse the falling trend by recording increases of 0.5 percent and 0.7 percent, respectively, in 2014 and 2015.

At the same time, unemployment will remain low in the coming months, but will hardly fall any further despite the positive economic developments.

KOF further noted that the economic environment will make it easier for the Swiss National Bank to end its zero interest rate policy and allow it to gradually start raising short-term interest rates again from 2015 onwards.

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2013-09-23 17:23

Russia's Economy Can Grow 3-4%, Presidential Adviser Says

Russia's economic growth rate is below potential, Russian Presidential Adviser Elvira Nabiullina said, according to news agency Itar-Tass.

But it can grow at 3-4 percent this year, Bank Rossii Governor-designate Nabiullina said. She said institutional reforms are needed for better growth.

The central bank is under immense pressure to cut rates to contain slowing growth. It has kept its key rate unchanged at 8.25 percent for the seventh consecutive month, but reduced rates on long-term liquidity operations by a quarter point in April as it sees increased risks to economic growth.

The bank said the macroeconomic indicators pointed to a continuing deceleration of economic growth and increased risks of its deceleration.

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2013-04-18 12:42

Switzerland Maintains Currency Ceiling; Keeps Rate Steady

The Swiss National Bank retained the currency ceiling and its key interest rate near zero as widely expected by economists, as the bank sees sluggish growth in the coming year.

The bank led by President Thomas Jordan decided on Thursday to maintain the minimum exchange rate of CHF 1.20 per euro.

The SNB said it will continue to enforce the floor rate with the 'utmost determination' as an appreciation of the Swiss franc would compromise price stability and would have serious consequences for the Swiss economy.

Further, the bank reiterated that it is prepared to buy foreign currency in 'unlimited quantities' to enforce the exchange rate.

The target range for the three-month Libor was maintained at 0.0-0.25 percent. The bank said it stands ready to take further measures at any time, if needed.

For 2012, the SNB forecasts consumer prices to fall 0.7 percent, compared to a 0.6 percent drop estimated at the September meeting.

The bank expects overall prices to ease 0.1 percent in 2013 and inflation at 0.4 percent in 2014. In the foreseeable future, there is no risk of inflation in Switzerland, it said. In September, the bank had estimated a 0.2 percent inflation for 2013.

According to the SNB, economic growth in Switzerland for the year 2012 is likely to remain unchanged at around 1 percent, in line with September forecast. For 2013, the bank expects growth of 1 percent-1.5 percent.

The economy grew 0.6 percent in the third quarter, strongly recovering from a 0.1 percent contraction in the previous three months.

Although real GDP in the third quarter increased following a temporary downturn, the SNB expects significant weakening in growth in the fourth quarter.

Even at current levels, the currency is likely to act as a drag on growth in the coming quarters, Jonathan Loynes, chief European economist at Capital Economics said.

If Eurozone crisis re-escalate, safe haven flows into the currency may well pick back up again, providing a sterner test of the SNB's determination, he said.

The Swiss economic growth in 2013 is likely to be weaker than previously thought due to deteriorating global economic conditions, the State Secretariat For Economic Affairs (SECO) suggested Thursday.

Gross domestic product is now expected to grow 1.3 percent next year, at a slightly weaker pace than the 1.4 percent growth forecast in September. The GDP projection for this year was left unchanged at 1 percent. Growth is seen picking up momentum further in 2014 with the GDP expanding 2 percent

The KOF Institute last week lowered the Swiss economic growth, citing weaker exports and investments. It projects 1.2 percent growth for next year.

Earlier, the SNB had introduced a countercyclical capital buffer allowing the Federal Council to increase the capital buffer of banks depending on potential excesses in the Swiss credit market. ING Bank NV's economist Julien Manceaux expects this facility to be used in 2013.

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2012-12-13 15:24

German ZEW Economic Expectations Recover Strongly

Germany's economic confidence turned positive in December for the first time since May 2012 as the largest euro area economy is expected to avoid a recession, a closely watched survey of financial market experts showed Tuesday.

The Indicator of Economic Sentiment climbed sharply by 22.6 points to 6.9 for December, survey from the ZEW Centre for European Economic Research revealed. Economists had forecast the reading to improve to -11.5.

Positive development in the U.S. also contributed to the improvement, which spurred the hope that the global economy will gain momentum. "The financial market experts forecast the development of the economic activity in 2013 with pre-Christmas optimism," said ZEW President Wolfgang Franz.

Although the cooling down of the economic activity will last until the beginning of 2013, Germany will not have to face a recession, provided the crises in the Eurozone do not deepen once again, he added.

The assessment of the current economic situation in Germany remained almost unchanged in December. The corresponding indicator gained 0.3 points to 5.7.

In contrast to the findings of ZEW survey, the German economic ministry today said the activity will weaken further in the final quarter of 2012. For the coming months, leading indicators show a dim picture, but with bright spots, it said in a statement.

The German economy grew 0.2 percent in the third quarter. Citing widespread uncertainty and difficult economic situation in parts of the euro area, the Bundesbank last week slashed its 2013 growth forecast for Germany to 0.4 percent from 1.6 percent.

Economic expectations for the Eurozone rose by 10.2 points to 7.6 points, the survey showed. The indicator for the current economic situation, at the same time, came in at -79.9 points-mark, up 0.4 points from the prior month.

The European Central Bank cut its economic forecasts for the euro area last week. The central bank projects GDP contractions of 0.5 percent this year and 0.3 percent in 2013. The economy is expected to recover in 2014 with a growth of 1.2 percent.

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2012-12-11 16:42