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Market news

24 June 2020

SNB Quarterly Bulletin: GDP is likely to contract by around 6% this year; this would be the strongest decline since oil crisis in 1970s

  • In light of highly valued Swiss franc, SNB remains willing to intervene more strongly in the foreign exchange market
  • SNB’s expansionary monetary policy helps stabilise economic activity and price developments in Switzerland
  • In current situation, inflation and growth forecasts are subject to unusually high uncertainty
  • Inflation rate seen to be negative (–0.7%) this year, and is likely to rise in 2021, but still be slightly negative (–0.2%), before returning to positive territory in 2022 (0.2%)
  • Coronavirus pandemic has pushed global economy into sharp recession
  • Decline in global GDP is likely to be even more pronounced in Q2
  • In its baseline scenario for global economy, SNB anticipates that further waves of infection will be successfully prevented
  • Global production capacity will probably be underutilised for some time yet, and inflation is likely to remain modest in most countries
  • Baseline scenario is subject to high level of uncertainty on upside and downside alike
  • Swiss economy is also in sharp recession
  • Although downturn set in only in March, GDP was already 2.6% lower in Q1 than in the previous quarter; decline in GDP is likely to be even stronger in Q2
  • SNB anticipates that there will be only partial recovery for the time being, and GDP will not return quickly to its pre-crisis level
  • Economic revival in Q2 of the year is likely to be reflected in clearly positive growth in 2021

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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