2012-09-05 09:23:07 - Switzerland Business Forecast Report Q2 2012 - a new country guide report on companiesandmarkets.com

We have revised our 2012 forecasts for Swiss real GDP growth. Following estimated 2011 growth of 1.9%, our significantly bleaker outlook for the global economy means we now forecast 2012 headline growth at 0.6%, from 1.0% previously.

The Swiss National Bank has set a ceiling on the Swiss francs value versus the euro in the face of substantial appreciatory pressures resulting from the eurozone sovereign debt crisis. This will help to protect the countrys export sector from a severe loss of competitiveness and thereby limit the impact of external turbulence on near-term economic growth. However, the massive scale of the monetary easing involved in such foreign exchange intervention could dramatically inflate property prices if maintained into the medium term.

Major Forecast Changes

We

 

 

have modestly revised down Switzerlands 2012 real GDP growth forecast to 0.6%, from 1.0%. While we expect the severity of the eurozone sovereign debt crisis to weigh on the nations trade flows, affecting exports in particular, we believe the Swiss economy will avoid a contraction on the back of relatively resilient domestic demand.

We have revised down our forecast for Switzerlands current account surplus in 2012, to 13.3% of GDP from 14.8% previously. We maintain our 2011 current account surplus estimate of 13.8% of GDP; however, our expectation for significantly weaker external demand for Swiss exports, and a stronger Swiss franc, is likely to see the countrys impressive surplus shrink in the coming years.

Key Risks To Outlook

Downside Risks To Real Growth Forecasts: If the situation in the eurozone continues to deteriorate without mitigating action from eurozone policymakers, a regional financial crisis akin to that seen in 2008 may result. Such an outcome would have a severe impact upon global growth, hitting the Swiss export sector and by extension real GDP growth. A 2012 recession cannot be ruled out given the risk of a significant eurozone policy mistake in the months aheadThe price of this business forecast report covers 4 quarterly reports on this country. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

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