By Maximilian Clarke
Market uncertainty resulting from the eurozone crisis has translated to a slowdown in the Swiss economy, Credite Suisse have confirmed.
For the large part, Switzerland had avoided the slowdown affecting its neighbours, but Germany’s recent wobble has seen Swiss economic growth drop to 0.5% from the 2% average earlier this year.
The euro crisis continues to weigh on markets, with economic momentum in Europe fading unexpectedly quickly. The situation facing the Swiss economy has also deteriorated as a result. Credit Suisse economists are now forecasting growth in Swiss gross domestic product (GDP) of 0.5% (previously 2%) for the Swiss economy in 2012. Compared with the September forecast, prospects for the key destination countries for Swiss products have become decidedly gloomier, and the constant talk of crisis is affecting sentiment. For Switzerland, this means lower exports and capital spending on machinery and equipment. The country's economy will, however, continue to be supported by private consumption together with activity in the construction sector.
Softer demand from abroad implies that Swiss exports will come to a virtual standstill in 2012 despite the slightly weaker Swiss franc. According to the Credit Suisse forecast, the volume of exports is likely to grow by only 1% in the coming year. The Swiss National Bank (SNB) is playing a key role in removing some of the uncertainty on exchange rates through its creation of a euro/Swiss franc floor.
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