21 August 2015
Brought to you by Investec Switzerland.
The strength of the Swiss franc, which is weighing on exports and prices, is a challenge for the country, Switzerland’s economy minister said.
“It’s a very strong currency. It reflects naturally our political stability, it reflects our predictability, it reflects our flexible labor market,” Economy Minister Johann Schneider-Ammann said in an interview with Bloomberg Television on Thursday. “But it’s a challenge to live with as well, naturally.” Consumer prices are set to fall the most in six decades this year, exports are suffering and joblessness is set to rise after the Swiss National Bank dropped its cap on the franc of 1.20 per euro on Jan. 15. With the franc having appreciated roughly 12 percent since then, the Swiss economy may suffer its first recession in five years. In response to a question about what he believed to be fair value for the franc, Schneider-Ammann said purchasing power parity was at 1.22 per euro. He said he hoped the currency would weaken to 1.10 per euro in coming days or weeks. The franc was trading at 1.07364 per euro at 11:32 a.m. in Zurich on Thursday.
Switzerland’s State Secretariat for Economics sees gross domestic product expanding 0.8 percent this year, accelerating to 1.6 percent in 2016. Unemployment is set to rise to 3.5 percent next year from 3.3 percent this year, according to its most recent forecast, issued in June. By Catherine Bosley and Paul Verschuur (Bloomberg).