The sharp downturn of the Swiss economy is gathering further pace as a slump in exports spreads to domestic sectors, an unexpectedly steep fall of the KOF growth barometer for March showed on Friday. The widely watched Swiss Economic Institute (KOF) indicator, which points to the economys performance in six months time, dropped to -1.79 from a upwardly revised -1.37 in February, a new record low.
In a Reuters economists poll, the median expectation was for a decline to -1.55 from an originally reported February level of 1.41. "Horrible. The market yet again underestimated the weakness of the Swiss indicators," BNP Paribas analyst Eoin OCallaghan said in a note. "We are currently forecasting a 3.5 percent contraction in the Swiss economy, consistent with the current prints of the KOF, and the risk is to the downside," he said.
Switzerland followed other major economies into recession in the middle of last year and while it is holding up better than its neighbours, it faces the deepest and longest recession in over 30 years. The KOF expects the economy to contract by 2.4 percent in 2009 and another 0.3 percent in 2010. The Swiss National Bank, which has taken sweeping measures to boost the economy, sees gross domestic product shrinking by up to 3.0 percent this year.
The Swiss franc briefly dipped against the euro after the KOF data, though the eurozone currency remained under pressure from comments made earlier by Germanys finance minister. The SNB intervened to stem a rise in the franc on March 12, when it also cut its interest rates to a record low of 0.25 percent and announced a plan to purchase bonds. Since then, the franc has traded in a range between 1.52 and 1.54 per euro. On Friday, economists from UBS Wealth Management were the latest to forecast a deep, protracted recession in Switzerland, predicting a drop in gross domestic product by 2.8 percent in 2009 and by 0.4 percent in 2010.
Comments
Comments are closed.