Swiss Producer Prices Rise
The Swiss Federal Statistics office has this morning released the May update to the Producer and Import Prices Index. The year on year number has come in at -0.8%, this was the market anticipated number and represents a rise on the April reading of -1.2%. On a month on month basis the change was 0.1%, again this was exactly as predicted by economists and it is an improvement on the -0.3% revealed in April.
The Swiss State Secretariat for Economic Affairs (SECO) has in the last hour published the Summer 2014 update to it’s economic forecasts for the country. SECO has scaled back growth forecasts for the Swiss economy, it is now predicting GDP expansion of 2% and 2.6% in 2015, this were previously 2.2% and 2.7% respectively.
The focus of blame for the sluggishness in Swiss economic growth is firmly on the fragile export market. SECO is citing the asymmetric nature of the global recovery as having an adverse effect on the international demand for Swiss goods and services. Southern European and emerging market economies are being particularly singled out for their lack of growth.
In addition to fundamental demand problems in a set of Switzerland’s trading partners, SECO is noting that the expensive value of the Swiss Franc is also acting as deterrent against the international purchases of Swiss produce. The cap placed on the CHF against the EUR by the Swiss National Bank is providing some relief however the Franc is still suffering from over valuation against many other international currencies.
Although the export situation is forecast by SECO to improve over the coming few quarters there still remain some highly probable risks that could provide further setbacks to a recovery in trade. Namely, a continued slowdown in China, an escalation of geopolitical tensions and a failure by the Eurozone to recover in line with projections all hold the potential to further derail Switzerland’s recovery prospects.
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